THE APRIL FOOL SUBSIDY PLOY

Now that I think about the proposed April 1st (fools day) date for removing subsidy,I ask myself how come I never thought of that. Everyone should have suspected foul play. I was totally blind sided when I got the news that subsidy would be removed effective from January 1st, I didn't know whether to run to the petrol stations for a quick fill up of my tank or just sit there in shock. Government really had me fooled this time,am sure they got you too.

Subsidy is gone and we are not sure of the implication this would have on the polity over the next few days,let's however have a quick look at an analysis of the economic and developmental benefits/disadvantages of subsidy removal. According to Government's figures the financial burden of petrol subsidy are:

 Between 2006-2011, the government spent N3.7 trillion on subsidy.
 Between January and November 2011, the government borrowed N850 billion to make up this year's N1.3 trillion fuel subsidy.
 As at October 2011, N1.3 trillion had been spent on subsidy in 2011 alone.
 It is estimated that N1.43 trillion would have been spent on subsidy by the end of 2011. 
 Without the removal of the subsidy, it is projected that N1.1 trillion will be borrowed to fund the subsidy in 2012.
 Finally Constant borrowing is not healthy for the economy.

Financial benefits of removing subsidy include:

 With the removal of the subsidy, the total projected subsidy re-investible fund per annum is N1.134 trillion based on average crude oil price of US $90 per barrel. Out of this:

 N478.49billion accrues to the Federal Government
 N41.03billion to state governments
 N203.23billion to local governments
 N9.86 billion to the Federal Capital Territory (FCT)
 N31.37billion as transfers to derivation and ecology, development of natural resources and stabilization funds

The decay caused by the corruption of subsidy beneficiaries includes:

 Most of the products subsidy beneficiaries claimed to have been imported found their way to neighbouring countries through unscrupulous marketers.
 Most of the products they claimed to have imported didn't come into the country.
 To highlight corruption in the name of subsidy, it is unimaginable that 15 vessels of products would land at the port the same day, considering the differences in the import allocations to the marketers. Yet, there is such a record.
 Some marketers collected letters of credit, got paid their subsidies, yet failed to repay the loans they collected from banks.

Subsidy does not improve local economy. With fuel importation and subsidy, government creates jobs for other countries and improves their economies. Any one who is presented with the argument for the removal of fuel subsidy would surely be convinced though the harsh economic reality is beginning to bite as fuel now sells for between 138 naira and 150 naira per litre. We can reasonably expect the instant rise in the prices of everything from transportation to food stuffs and especially crime.

This would be a difficult time for Nigerians, for it would take us a while to settle into this new economic reality. As I type this article under immense heat with sweat running down my face because I could not afford to buy petrol for my generator set, I however know that it is well with us by God's grace. Amen

Adedunmade Onibokun Esq.
Sent from my BlackBerry® wireless handheld from Glo Mobile.