Nigerias Economic Problem; Fuel Subsidies or Corruption ?

By Hilary Uguru

Nigeria is one of the richest African nations with an annual GDP growth of 6.9% In spite of it´s wealth, Nigeria is ranking among the poorest on the UN Human Development Scale, and the average income is 330 dollar per year [1]. One of the reasons for the poverty of the Nigerian population is widespread corruption, reaching from business, industry, over regional government, into the highest echelons of politics. Nigeria is rated as one of the most corrupt countries in the whole world by Transparency International.

Fuel subsidy is one the last few privileges that masses benefited from the government. Under this program the Nigeria Federal government pays part of the cost of petrol used in the country to enable the masses to afford it at a cheaper rate. Over the years there has been gradual reduction in the percentage paid by the federal government to subsidize the fuel price. The remaining percentage of fuel subsidy paid by the federal government however, was removed on January 1st 2012 by Nigerian President, Dr. Goodluck Jonathan. The president says that removal of the fuel subsidy is for the good of Nigerians, because a certain cabal is enriching themselves through the money paid as fuel subsidy. Similarly Nigeria’s Central Bank Governor, Mr. Sanusi Lamido Sanusi said that the fuel subsidy on Nigerian petroleum benefits the cabal more than it benefits the poor. The logic, slam the fuel subsidy for the poor as remedy against corruption.

The government is saying that this cabal which is difficult to handle is draining the Nigeria economy through fuel subsidy. The one million questions is this; who are these cabal? One is led to suspect that this cabal must be Western interests, because no Nigerian will be bigger than the country to handle. The government should know that removing the fuel subsidy is not the solution to the corruption in the oil sector; because without arresting this cabal, it will take no time before a change of tactics will enable the corrupt elements to adapt and develop new mechanisms for draining the country for the wealth that is rightfully that of the Nigerian population.

Nigeria has more than 70% of its population living below the poverty line [2] and below 1USD per day; furthermore Nigeria has $2,334.26 per capita income [3]. After the subsidy removal, most Nigeria families are suffering the pain of hardship because apart from drastic rise in transportation fares, food stuffs and almost everything have increased, how will Nigerians cope with the current economic situation.

The Nigerian government is highly insensitive to the social needs of the people, because this same government that said that it can no longer sustain payment of fuel subsidy is proposing to spend large amount of money on few persons within the government.

For instance, the Ministry of petroleum resources is proposing to spend 27 million naira (about USD167, 701) on each of the 1100 staff of the Department of Petroleum Resources for 2012, which is amount to 30 billion naira (about USD187500000).

If Nigeria can afford to spend this large amount of money on just 1100 workers one should presume that it can afford to continue with the provision of fuel subsidy to the people [4]. Also During the 2012 Nigeria´s budget defense, the office of presidency sent a proposal the senate which proposed that the presidential villa (Aso Rock) will spend 18.64 billion naira on fuel and lubrication, and about one billion naira for food in the presidential villa. Furthermore, Nigerian Communications Commission, NCC, is proposing to spend N75 million to replace old toilet doors, locks, repainting of fading walls and provision of directional sign posts to the commission’s waiting room and canteen. Also they proposed to spend N30 million for replacement of old furniture, despite an allocation of N25 million for same purpose last year, and as well as the N10 million proposal for replacement of air conditioners, despite an allocation of N10 million in year 2011 for same item[5].

The fuel subsidy removal protest has elicited widespread corruption of the government where the government cannot account for the oil used in Nigeria.   Up till now the Federal government cannot tell Nigeria the actual quantity of fuel consumed in country, from figures gathered each department in the presidency is giving different quotation. The Minister of petroleum resources is quoting Nigeria’s daily fuel consumption to be 52million Liters, NNPC is quoting 35million liters, Department of petroleum resources (DPR) is quoting 43 million liters, PPPRA is quoting 24 million liters, lastly the Finance minister is quoting 40 million liters [6]. This variation shows that the government is lost fantasy and buried in illusion seeking to decide Nigerians again. If the government cannot tell us the actual amount of fuel consumed in the country, how does he expect us to believe the trillions of naira that it is claiming to have spent on fuel subsidy in the country.

The fuel subsidy removal protest which was organized by Nigeria Labour Congress, Trade Union Congress and coalition of civil societies start during the second week of January 2012. The protest was precipitated by the drastic increase in the pump price of petroleum products, due to the removal of the fuel subsidy on January 1st 2012; in which a litre of petrol was sold between 150 and 160 naira (0.94 – 1USD) as against the former price of 65 naira (0.4USD) per litre. The protesters consists of the leadership of NLC, TUC, Nigeria union of Journalists (NUJ), Nigeria Bar Association, Artisans, market women, students and the unemployed youths. The protest was generally peaceful even though some states recorded some casualties.

There is no transparency by the Nigeria government on the actual amount spent on fuel subsidy, as they continue to feed Nigerians with lies; here are some of the quotations made by various departments within the presidency. The petroleum resources minister quoted 1.4Trillion naira while the minister of finance quoted 1.3Trillion naira and CBN is quoted1.7Trillion naira as the money spent on fuel subsidy for Nigerians in the year 2011.

Some political elites are now trying to play the game they used to play whenever there is high profile probe in Nigeria. They used to use their power to terminate the output of probe that takes place in Nigeria; that is Fela a popular musician in Nigeria called “Government magic which can turn electric light to candle.” As reported in one of Nigeria’s dailies, The Nation newspaper reports that the leadership of Nigeria House of representative says that they won’t bow to pressure over subsidy cash probe because some notable Nigerians have bought some of the House members over to form a body called G57 Transparency Group whose main objective to terminate the current probe into the fuel subsidy fraudulent activities [7].  It looks as if the government is formulating a nice escape route for those involved in this fraud, because up till now no arrest has been made.

Major oil companies and marketers financed by the westerners are found out to be involved in fraudulent falsification of figures to enrich themselves, but up till now no arrest has being made, this shows that some people are pulling the strings somewhere. How long will Nigeria leaders be puppets to the western agents? Nigeria will be dreaming if he thinks that the western countries will came to Nigeria to build new functioning refineries for us because, by doing so Nigeria will no longer patronize their own refineries which will lead to economic crisis in their countries. No western country will not take such risk mostly now that Europe is defaulting and America is facing recession.

Nigerians are skeptical of the promised made by the Government that the money realized from the fuel subsidy removal will be used to fund mega projects, because Nigeria has a lot of “hit-and-run” contractors; these are contractors that will take contacts and either abandoning them or execute them at the highest substandard level. It is amazing that the only penalty the President deems appropriate for fraud in public contracts is blacklisting, especially when fraudulent contracts have created poor and dilapidated roads, decrepit railway tracks, ill-equipped hospitals, schools, dams and a dire infrastructure deficit that keeps 70 per cent of Nigerians in poverty. By late last year Nigeria has 11,886 abandoned federal projects scattered across the country that would require N7.78 trillion to complete [8]. Therefore the mega projects the presidency is proposing to do with the fuel subsidy money will still go the same way. Furthermore the money realize from the fuel subsidy removal will be shared among the three tiers of government (i.e. the Federal, The state, and the local government areas), how are we sure that majority of the States and local government areas will utilized their share appropriately, because most of the State governors cannot account for the federal allocation received from Abuja.

You can fool some people sometime, but not all the time.




[4] “2012 budget: FG to spend N27m on each DPR staff.”


[6] “The Face of Liars: Probe of Fuel Subsidy Liars-in-Chief.”

[7] “We won’t bow to pressure over subsidy cash probe, says reps.”

[8] “Tackling abandoned government contracts.”

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