Like corruption, which is widely believed to be Nigeria's intractable and most protracted challenge, the oil industry leads other sectors of the country's economy as the most attractive yet most troubling to the wellbeing of Nigerians, at least, in the past 40 years, with oil subsidy being the worst of all the crises that have continued to bedevil the nation's 200 million lives.
Aside from attracting many of the noisiest controversies in Nigeria's media space, no policy in Nigeria's economic history has suffered from tales of corruption as much as the oil subsidy has.
With a deliberate, though ulterior motive to further plunge Nigeria into a fresh oil subsidy sinkhole, the Minister of Finance, Budget and National Planning, Zainab Ahmed, announced at a press briefing after the Federal Executive Council (FEC) on Wednesday, April 5, 2023, that the federal government has borrowed $800 million (about N368.2 billion or N596 billion at black market rate) from the World Bank to provide post-petroleum subsidy palliatives for over 50 million Nigerians ahead of June 2023, when the subsidy would cease to exist.
The palliatives, she explained, are expected to cushion the economic challenges that would come with the total removal of what the government called "under-recovery." Speaking further on the loan, the minister said government had met with members of the incoming administration as well as the newly established Presidential Transition Council (PTC) on palliatives.
To justify the loan, the minister affirmed that "There's a provision in the Petroleum Industry Act (PIA) that says 18 months after the effectiveness of the PIA, all petroleum products must be deregulated. The 18 months takes us to June 2023." Specifically, she said the $800m, which is the first tranche of the loan shall be disbursed in cash to 10 million households considered to be most vulnerable; adding that prospective beneficiaries have already been captured in the National Social Register (NSR) with a view to cushioning the effect of subsidy removal.
Since the minister's pronouncement, questions, doubts, anxiety and suspicions have continued to trail the $800 million loan from the World Bank. Nigerians have good reasons to doubt the government's sincerity of purpose in this whole matter of oil subsidy, which narrative for a long time has never gone beyond corruption.
So many things are ethically wrong with this loan at this time. What does the country need the loan for now? Why should the government take this loan at a time when it's about to leave office? It's scandalous to take a loan on behalf of an incoming administration that is due to take over power in half a dozen weeks.
It's also ridiculous and self-contradictory for the government, which already said it was leaving the decision on oil subsidy (a major economic policy) for the in-coming administration, to thereafter reverse itself with the $800 loan on subsidy. The assertion by the minister of finance that "there are several things that we're still planning and working on" after the loan had been acquired further reveals how unprepared and uncoordinatedly the government intends to utilise the loan.
How come government acquired the loan in lieu of palliatives, with details of the areas of intervention remaining speculative? The whole thing about this loan looks suspicious, dangerous and scandalous.
Even the decision to disburse the fund in cash to 'poorest citizens' is in itself fraudulent. The same government planning to disburse cash is vehemently enforcing a cashless policy. This is even as the NSR is a subject of interrogation. How were the names in the NSR generated? How were the 'poorest citizens' identified and selected? These poorest of the poor, do they even have bank accounts? What's the government's definition of the poor?
To probably pre-empt further arguments on the loan, the minister of finance also said the loan has been secured, and "it's ready for disbursement"; noting however that "the federal government must raise more resources to enable it to do more than cash transfers." It's outrageously heinous for a government with a huge debt profile to add more to it.
According to the National Bureau of Statistics (NBS), Nigeria's public debt stock stood at N44.06 trillion, or $101.91 billion, in the third quarter of 2022. There's no justification whatsoever for the government to engage in this very controversial borrowing.
Given our experience about a decade ago, Nigerians became victims rather than beneficiaries of palliatives as huge resources were wasted on the Subsidy Reinvestment and Empowerment Programme (SURE-P); all due to lack of transparency and sincerity of purpose.
In 2012, the administration of former President Goodluck Jonathan mismanaged over N16 billion in the Public Mass Transit Revolving Fund (PMTF) under the SURE-P scheme. Most of that money was never recovered from the recipients of the SURE-P loans. Investigations revealed that most of the 31 commercial transport operators that benefitted from the 1,179 vehicles released under a four-year repayment scheme were blacklisted as chronic defaulters for failing to fully repay their loans. Yet, no one was held responsible for this inexcusable failure of the scheme.
The provision of palliatives presupposes that even after President Muhammadu Buhari's administration, government will continue to import refined petroleum products because that is the singular factor that, in the first place, informed it. No discussions on palliatives would have come up if petroleum products were being refined in the country because the cost of freight, insurance, and demurrage, for which government pays subsidy would be irrelevant.
If the country's refineries had been reactivated and working even at 50 per cent refining capacity, there wouldn't have been any need for any subsidy. The pump price of petrol, too, would by the same token drop.
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Certainly, where there's no subsidy, there should be no reason for palliatives. While it's nonsensical to borrow to subsidise consumption, it's a clear recipe for corruption when the government takes a loan to provide so-called palliatives when there already exists a framework to fund its social investment programmes.
Indeed, Nigerians have repeatedly argued that the subsidy regime in the country only subsidizes the rich who own many cars, which explains why the majority of the poor don't benefit as much from it. Subsidy would never have been an issue today if the present administration had revived all its refineries.
With the huge loan from the World Bank, the supposed relief that Nigerians are being told they would enjoy is nowhere near the sufferings to which they would be subjected. Believing that the already high inflation rate on consumer goods would worsen in the same way that the purchasing power of the naira would weaken further, most, if not all, of the gains of the loan shall be to the advantage of the World Bank and not Nigeria.
While we believe that Nigerians need subsidies in the health and education sectors, it's rather irresponsible for the government to borrow $800 million to tackle a problem that, in the first place, shouldn't be there. We, therefore, reject the $800 million loan in its entirety.
