Fuel Subsidy Palliatives Should Be Channeled To Production, Not Consumption – Kpakol

By Suleiman Umaru

Magnus Kpakol,  a Professor and  Chief Economic Adviser  to former President Olusegun Obasanjo and   now  Chief Executive Officer,  CEO,    and  Chief Strategist  at the Chief Economic  and  Business  Strategies, based in the North American country of the United States, US, and Nigeria has kicked against President Bola Ahmed palliatives to vulnerable Nigerians ‘’to mitigate  the economic pains brought about by the removal of the fuel subsidy by his Administration.

Prf.dKpakol, who shuttles between Nigeria and the US, had there was nothing wrong with the removal of subsidy on fuel importation into the country. The former Chief  Economic Adviser to  erstwhile President   Obasanjo who  had expressed support for the fuel subsidy removal  had said that the palliatives should be  used to repair the country’s in refineries and petrochemical plants in Port Harcourt, Capital of Rivers state, Warri, Delta and Kaduna, which are working in bits and fits.

The four existing in the country have a total combined reefing capacity of 425,000b/d but are currently working in bits and fits.  Past Administrations had spent billions of dollar to carry out Turn around Maintenance, TAM, on the plants, but that was how far the then Buhari’s Addministration could go.

Recall that Abdullahi Sule, a former governor of Adamawa, home state of Atiku Abubakar, a former Vice President, during Obasanjo’s eight years Administration and who was the Opposition party, PDP, Candidate, in the February 25, 2023, Presidential election, had said   that Buhari’s Administration had spent over $19 billion that could not be independently verified   on repairing the country’s c four existing refineries for the eight years in office without commensurate results.

This may have informed why the  governors  and Mohammed Shehu, Chairman,  Revenue Mobilisation  Allocation  and Fiscal Commission , RMAFC,  had thrown their weight  for the removal  of  subsidy , citing  lack of transparency in the  scheme   and the massive fraud in the process of payment to the marketers.

As a prelude to removal of the subsidy,  the then Buhari’s Administration   had secured  a World Bank  facility  worth $800 million  to attend to about 50 million  Nigerians  who  belong  to the most  vulnerable category  of  the country.

Hajia Zainab Ahmed, former minister of Finance, Budget and National Planning had said that  discussions  were held  between the immediate past Nigeria President  and the incoming  President Tinubu  on modalities  for the  removal  of fuel subsidy  by middle of  this fiscal year.

President Bola Ahmed Tinubu

This may have informed why the former Lagos state governor  had sought the approval of Godswill Akpbabio , a former governor of Akwa Ibom  state led Senate  for a borrowing request  of $800 million sourced from the World Bank  earlier  sent to the  upper Chamber  by the then Buhari’s Administration  in the 19th National Assembly that was not treated by the Lawmakers.

Tinubu had said that   the loan be used  ‘’to scale up  the national  Social  Safety  Net programme  among the poor  and vulnerable Nigerians to assist them in coping  with basic daily needs’’.  He had said  under  the conditional ttransfer window   of the programme , the government  will transfer  N8,000.00  per month o 12 million  poor or low  income households for a period of six months with a multiplier effect on about 60 million individuals.

Hajia Ahmed, the immediate past minister of Finance,  Budget and National Planning  had disclosed that  the government  already  has a list  of 10 million  households  which is equivalent  to about  50 million  Nigerians that would receive the N8,000 per month for the six months.

  Prof. Kpakol, would want the Nigerian government to study how Canada and the US, two developed economies are implementing similar policies to do so in Nigeria without hitting the rocks.  The Chief Economic Adviser to former President Obasanjo’s Administration, who could not hide his feelings had said that the subsidy removal should have been implemented in phases, allowing Nigerians to adjust.

He was emphatic that the problem of most Nigerians to the subsidy removal was one of adjustment. He averred that Nigerians  are not in a position to be able to switch  to the new price  arrangement of a litre of fuel  at the filling stations due  to the   subsidy removal  because of the dependency  past  governments had created for vulnerable Nigerians over the years. 

The Economic strategist  major worry  that there will be a major uphill battle ahead over the subsidy removal  may not be unconnected to the fact that people  transporting  foodstuffs  from the rural areas in different parts of the country, particular, in the north western states of  Zamfara, Kaduna,  Sokoto, Katsina,  and the north eastern states of Borno  and Yobe including the north central states of Niger, Benue, Plateau and south eastern states of Anambra, Enugu, Eboyi and  Imo, are burdened by terrorism, banditry , insecurity and high prices.

He noted that as general inflation is extremely high  for Nigerians for now , it would  further things in the country by making transportation  costs even  steeper. It is not surprising why he had suggested that the government ought to have addressed the transportation costs through slightly subsidised fuel for Commercial vehicles instead of taking thewho thing away completely.  

The Chief Economist  had expected the Tinubu’s Administration   to use   computers,  electronics, machines and other devices  at the filling stations  where Commercial vehicles , taxis and those in Commercial transportation ,  should be able’’ to get  fuel at a slightly , not completely subsidised  method’’  rather  than seeking  the approval of the Tajudeen Abbas  led House of Representatives of an $800 million  World  Bank loan  request by the former Nigerian President  to transfer to  12 million  poor households in the country, as part of the government efforts  to mitigate the economic pains brought  on by the  complete removal of the fuel subsidy on May 29, 2023.

Gov. Uzodinma: Increases Workers Minimum Wage In TImo State To N40,000.00

While the  incumbent Nigerian President , is more concerned ab paying palliatives of N8,000.00  each to to 12 million households  in the next six months, Senator Hope Uzodinma, governor of Imo state  may have taken the bold  initiative  to increase  minimum wage of workers  in the state to N40,00.00 per month, to cushion the adverse effect  of the  complete removal of fuel subsidy  by the administration.

Prof. Kpakol, may not be alone in kicking against the government payment of palliatives to 12 million Nigerian households to mitigate the economic pains of subsidy removal.  The Leadership of the Nigerian Labour Congress, NLC and Trade Union Congress, TUC, were said to have also  faulted  Tinubu’s Administration’s plan  of giving  the N8,0000.00 cash palliatives  each to 12 million Nigerian households for the next six months.

The Organised Labour had said that  the  former Lagos state governor ‘s cash palliative plan for payment to 12 million households  for the next six months  was running  contrary  to the works  of the  Presidential  Technical Committee on the removal of the subsidy.

The OPS, Leadership, had said  that ‘’it was not only undemocratic  for the government to do so  but showed that the President  is merely  inaugurating  the Committee for the payment of the N8,00.00 palliatives to the 12 million household in Nigeria as a window  dressing  for whatever   purposes  he has set out to achieve for himself’’.

Festus Osifo, President TUC and who incidentally  is also the President  of Petroleum  and Natural Gas enior Staff Association of Nigeria, PENGASSAN, may have sent a message to the government  that  if the payment of the cash palliatives  to the 12 million Nigerian households  is not in line with the agreement  reached  with Labour  and in line with the resolutions  of the Technical Committee at its meeting,  they will not hesitate to  mobilise their members to protest the policy that may paralyse the economy.

 The  Imo state governor may have read the handwriting on the wall  and would not the workers to embark on protest in the state because of the harsh effects of the complete  subsidy removal by the inubu’s Administration  that he had also  promised  after a stakeholders meeting at Owerri, the state Capital  on Saturday, July 15, 2023,  to make available  N5 billion  soft  loan for farmers  to  enhance their productivity , notwithstanding the  approved upward review  of the monthly  minimum wage  of workers in the state from N30,000.00 to N40,000,00 .

Going by the steps taken by the Imo state government to increase workers minimum wage in the state beat the Federal government to it, Senator Uzodinma, appears to have sent a message to other  state governors to follow suit to review  the salaries and  wages of  workers  to cushion  the negative effect of the subsidy removal.                        

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