Joachim MacEbong: Buhari Should Return To N97 Per Liter

Joachim MacEbong: Buhari Should Return To N97 Per Liter

Editor’s note: The Legit.ng columnist Joachim MacEbong explains why it is necessary for President Muhammadu Buhari to reconsider the fuel price reduction introduced by the previous Goodluck Jonathan-led cabinet, and return to the pump price of N97 per litre.

The views and opinions expressed here are those of the author and do not necessarily reflect the official policy or position of Legit.ng.

Story highlights:

— Despite arguing against the continuation of fuel subsidies, in January 2015 the Goodluck Jonathan-led administration reduced the pump price of petrol

— In May, Nigerians experienced the full force of the effects of petrol scarcity

— Return to the January 18 pump price of 97 Naira will solve several current problems at once

Cause and effect in governance

There is a section of the public that would like the Buhari administration and the APC to just carry on with governance and reduce the references to the past administration. But for many reasons, that is simply not possible. Governance is a continuum, and the actions of past governments help shape the actions of current governments. International treaties signed or not signed, bilateral or multilateral agreements entered into, wars started – or ended – affect the choices open to any subsequent governments.

The examples of this are too numerous to mention, especially when you think about Nigeria. The Udoji Awards in the 1970s was a key event in the squandering of the first oil boom, and the bloated civil service we lament today also started in that era, entrenched by subsequent governments.

More recently, the reforms in the telecommunication sector by the Obasanjo administration paved the way for much of what we enjoy today, however imperfect. He could have added power reforms to that, but by that time, the fog of his third term ambition had descended. It delayed those reforms by over five years.

“Petrocalypse"

The decision of the Jonathan administration to reduce the pump price of petrol on January 18 to 87 Naira from 97 Naira per liter is another example of the actions of a government affecting the one after. In trying to shore up popularity for a battered presidency, the reason given for the reduction was the low crude oil prices.

Such a reason would have made sense, if not for the fact that the Jonathan administration had spent the entirety of its life arguing against the continuation of fuel subsidies. Its removal in January 2012 led to Occupy Nigeria protests rejecting the removal, and a broader investigation into the petroleum industry and the cost of governance.

Fast forward three years, and the same government in its desperation went against everything it had been saying. What was worse, other countries like India and Indonesia took advantage of lower prices to scrap subsidies.

At the time of the reduction, the subsidy bill was non-existent. However, the CBN’s decision to scrap the Dutch Auction System in February amounted to a devaluation of the Naira. This, combined with a slight increase in crude prices, meant the subsidy bill began to go up once more. By March, there were petrol queues on the streets with marketers saying they could not import petrol because they had not been paid. By the end of May, Nigeria had nearly ground to a halt, with radio stations, banks, telcos, and lots of other businesses having to stop work due to the lack of petrol and/or diesel.

What will Buhari do?

Nigeria pulled back from the brink of the ‘Petrocalypse’ just in time for the inauguration, but the queues have never really disappeared, resurfacing at intervals. Since May 29, there has been uncertainty about whether Buhari will retain or scrap petrol subsidy, but right now he appears ready to retain it. Last week, he said the arguments for subsidy removal were ‘lacking depth’.

While he is certainly entitled to his opinion based on the information before him, it is also a fact that revenues from crude oil are falling. In addition, even though lower crude prices are good when it comes to importing petrol, another currency devaluation appears imminent, which will still increase the subsidy bill going forward.

A return to the January 18 pump price of 97 Naira can help reduce that bill, satisfy the marketers and ensure that fewer people spend productive man hours queuing at petrol stations. It also does not carry the political risk that a total removal of subsidy would carry, if that is what the government is afraid of, although it is the view of this writer that the fallout will be much less than that of January 2012. If asked, the Buhari administration can say, correctly, that the queues came back when petrol was reduced to 87 Naira.

It is time for the Buhari government to undo the ill-advised and desperate move by the Jonathan administration to reduce pump price while chasing votes, at a time when revenues are suffering, while increasing the suffering of those the reduction was supposed to help.

It was a bad idea then, and it is a bad idea now.

Joachim MacEbong: Buhari Should Return To N97 Per Liter
Joachim MacEbong for Legit.ng

Joachim MacEbong is a communications professional and political analyst.

Source: Legit.ng

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