THE CASE FOR SUBSIDY REMOVAL

Augustine Avwode argues that the federal, states and local councils are getting more money from the FAAC as a result of removal of petrol subsidy

On May 29, 2023, as millions of Nigerians and non-Nigerians, both at home and in the Diaspora were glued to their television sets watching and listening to the newly sworn-in President Bola Ahmed Tinubu delivering his inaugural address to the nation, he declared as a matter of fact that, “subsidy is gone.”

 That pronouncement, for whatever it was worth, from that moment effectively took on a life of its own as it was seen as a policy statement and direction of the new government. It immediately and effectively brought to an end the much criticized subsidy payment regime on Premium Motor Spirit (petrol).

Within an hour or even less thereafter, the nation felt the impact and the full import of the pronouncement with the adjustment of the pump price of petrol across the country. Prices of goods and services, particularly, transportation jumped instantly in spectacular form and the government at various levels have since been doing everything in the book to mitigate and ameliorate the effects on the economy and the lives of the people through sundry poverty alleviation programmes. For the most part, all designed to cushion the effects of the removal of subsidy. It has been almost 11 months since that fateful day. Nigerians are gradually adjusting to live without subsidy with the federal and sub-national governments, day-in-day-out working round the clock to make things align properly for the good of all.

Last week, however, immediate past governor of Kaduna State, Mallam Nasir el Rufai, typically, stirred the hornets’ nest. He told journalists in Maiduguri that many citizens were not aware that the government had reintroduced the subsidy on petrol. What he was saying in effect is that the government was not telling the people the truth and that it had resumed the payment of subsidy in an under the table kind of operation.

“The Federal Government is now subsidising fuel; many people don’t know this. It is the right policy. I have always supported the withdrawal of oil subsidies; but in the course of implementing the policy, the government realised that subsidy has to be back; right now, the government is paying a lot of money for subsidy, even more than before.

“You start implementing a policy because you are sure it is the right policy, but in the course of implementation, you come across bottlenecks, and you modify.

“The keyword in leadership, in my view, is pragmatism. You should be pragmatic. So when you make a policy, you start implementing it, and it doesn’t seem to work well. You should have the humility to stand back and say this is not working, and you modify it,” the former governor stated.

To the unwary, Rufai’s comment on the highly combustible subject of petrol subsidy represents the truth and a soothing balm on a scalded skin of the poor and lowly in the society. However, to the discerning and thoughtful, it is pure mischief and guile brimming with hidden venomous intentions. Aside from the pretentious aspect of his intervention, his claim served as a futile attempt to deflect attention from his troubles back home bothering on alleged financial mismanagement for which the Kaduna State House of assembly has begun probing all that happened under his watch in the state.  

Though the naysayers and mischief makers amongst us will not agree, since that fateful day on May 29, 2023, when President Bola Tinubu made that landmark pronouncement, old things have since passed away. Mallam Nasir el-Rufai was only being economical with the truth.

One glaring indicator of the fact that the removal of fuel subsidy has not changed is the new face of the figures being shared monthly to the federal government and the sub-nationals by the Federation Account Allocation Committee (FAAC). For the purpose of his essay, we would like to compare what the FAAC distributed in March 2023 and what it gave out in March 2024. What it shared in August 2023 and the previous year of 2022.

The undeniable fact is that following the removal of subsidy, there was a substantial increase in the distributable pool for the three tiers of government in the country. And curiously, it has not declined since then. The question that one should ask the likes of el-Rufai is: where did the FAAC get the large amount of money which it has shared since May 2023, and why has it not gone down if indeed, the government has gone back to subsidy payment?

In March 2023, the Federation Account Allocation Committee (FAAC) disbursed the sum of N860.04 billion to the three tiers of government from the total revenue generated in February 2023. The amount disbursed comprised N487.11bn from the Statutory Account, N120.00bn from Forex Equalization, N12.13bn from Electronic Money Transfer Levy (EMTL) and N240.80bn from Valued Added Tax (VAT).

Just last week, the Federation Account Allocation Committee disbursed a total of N1.123tn to the federal, state, and local governments for March 2024. The allocation, derived from a gross total of N1.867tn. Imagine the difference.

In August 2022, available statistics showed that the FG, states, LGs shared N673.137bn as allocation. Fast forward to August 2023, the FAAC shared a total of N1.1 trillion to the federal, states and local government councils. And this trend has been consistent enough to put a lie to all claims that the subsidy regime has been restored by the government of President Bola Tinubu via ‘the back door.’

Though it is manifestly visible to even the blind that Nigeria has since June 1, 2023 transited from the petroleum subsidy payment regime, the doubting Thomases amongst us have deliberately refused to accept this fact of life and have rather continued to dish out misinformation and lies to the people.  They must be ignored.

Avwode is a Journalist