Buhari did not remove fuel subsidy-part 2

PDP lied to us. GEJ lied to us. Buhari lied to us. APC lied to us. SNG lied to us. Everyone that participated in, or supported the 2012 protest against GEJ lied to us. We maintain that Buhari did not remove fuel subsidy.

We will go straight to our point.

Read Also: Buhari did not remove fuel subsidy-Part 1.

During the fuel subsidy removal protests of 2012, the common denominator in that protest was that

  1. GEJ was corrupt.
  2. Fuel can be sold at N45 naira.
  3. SURE-P funds were mismanaged.
  4. Oil subsidy thieves should be punished; don’t punish the rest of us.

The prevailing argument then was that GEJ’s plan to remove subsidy was in order, but that the timing and other prevailing circumstances was wrong. Due to the uprising, GEJ’s government retracted their steps and continued doling out subsidies.

Fast forward to 2016. The same person that said he didn’t know about fuel subsidy is the same person that have removed it. His group of ministers and close associates were the same persons that withstood subsidy removal. Surprisingly, they’re all mute.

Simply put: President Buhari lied to us. All his ministers, pastors and Imams lied to us. We forgive them for lying to us.

Before answering this question, let’s back track and do a little analysis.

But the real question is this: Did president Buhari actually remove fuel subsidy?

When Nigeria opened up or deregulated the telecommunications sector, Nigerians were ripped off to say the least. MTN lines sold for more than N40,000 naira! We mean the same MTN line you can now buy for less than N500. Why was this so?

The Obasanjo regime deregulated telecommunications, but did not fix prices, hence the early rip-off we suffered in the hands of MTN and their accomplices. Deregulated economies usually rip-off before the benefits can be felt.

In Buhari’s case, he’s decided to both deregulate and fix prices. Well, this is partial deregulation. We think the government is trying to guard against the MTN kind of rip-offs we had. And this is basically why they have set a pump price for fuel-145 naira.

A counter argument to this is that, you don’t regulate prices for business. Market forces should either kill or sustain businesses. Since NNPC is a major player in the oil industry, the only rationale that can apply in relation to market forces is to allow NNPC to manufacture and sell fuel at lower prices. This way, other independent importers/marketers will be allowed to sell at a lower cost.

But here is another problem: our refineries are at best relics. They don’t factor in as a variable in the free market equation. They will sure be out-muscled by independent marketers. Even if our refineries work at maximum capacity we still can’t meet up local demands.

That said, another challenge of building refineries by other local and foreign investors is what the investor anticipates and that is: what will be the actual daily consumption of fuel if power becomes stable?

Another serious point to consider is this: It took us 24 years to start and complete three trains of our LNG plants.

Let that sink in.

So- the question is who can fork out at least $2billion to build a modern refinery and the support structures. Building 3 new refineries may cost up to $7billion and Nigeria cannot commit such funds into a single sector?

The Buhari’s government can no longer sustain subsidies because of crash in oil revenues. Buhari did not remove fuel subsidy; Market forces did. Therefore Buhari lied and is lying to us all.