Over the years, government have done everything possible to hide facts and the truth about Subsidy and Petroleum Industry have been like Secret Cult of a kind.
The whole world is going through tough times.
In the USA, government have been supporting citizens to cushion the effect of Covid 19.Even Trump did pay to citizens and right now almost 2 Trillion Dollars is being rolled out again to help the citizens.
Here is a detailed anlysis that should guide the Federal Government of Nigeria.
1. There is a claim that we consume 30m litres of petrol per day.We do not know how they arrive at this figure. Was it collated from daily sales of petrol stations for a month or week and then average figure was determined? Or some people just decided to fix a figure after a bottle of wine?
Nevertheless, let us assume this figure is correct, it becomes clear that paying subsidy does not have too serious effect on the government finances but will impact positively on Inflation and the general prices of goods and services and more importantly on prices of food items.
2. Those who consume Petrol to power their generators at home and at work are so many among the poor.
3. If price differential remains at N16 per litre as a result of the increase in crude oil price, the total amount per day will be N480,000,000. In a year, using 365 days based on equal daily consumption it will be N175.2 billion Naira.Please note ..in a year not in a month oooo.
At an average population of 216m people, all that you will give to a Nigerian will just be N811 in one year..Please note PER YEAR not per month oooooo.
4. If Price Differential is N20, the total subsidy per day @ 30m litres consumption daily will be N600m .The annual subsidy will be N219,000,000,000.
With population of 216m people, what you give to each Nigerian PER YEAR is just N1,013...Please note again ..it is per year.
5.If the price differential is N50 as claimed now to justify the need to increase fuel price to N212 per litre.It means every day with 30m litres consumption, FGN will be spending N1.5billion per day and in a year that will be N547.5 billion..Note again per year.
Using 216m population, all that a Nigerian will get is N2,534....Hmmmmm...Per year ooo not per month.
6.From the above analysis which no one can disprove, the effect of spending N547.5 billion on all of us in one year is about the only thing we can get from the government and it is just right to take care of us with this Palliative or stimulus or call it subsidy.
7.Any attempt to push petrol price to N212 will do more damage than good to Nigeria and Nigerians.
Marketters will be happy that the price differentials are taken care of and citizens will be happy that prices of goods and services will be stable.
8.The next step is to ensure that anyone trying to export Petrol through Niger Border, Cameroon, Republic of Benin are registered and at the exit from Nigeria they are made to pay duties that covers the N50 already given to Nigerians in price differentials and an additional excise duty.
That way, we know that the subsidy is for Nigerians and not to the pockets of exporters of PMS.
9.Meanwhile more work should be done on how to ensure that we pay for what is imported.The best way is the current method where NNPC handles all importation of PMS and every other Petroleum importere pass through NNPC and so NNPC is merely selling at discount based on price differential through the first line charge of our crude oil sales proceed.
10.In my considered opinion and view as an Accountant, I do not think this little payment of N2,534 per year per person is too much for us to get from Federal Government ...Mind you, in ONE YEAR.
11.Government need to set up a Committee to look into how to block leakages in that sector and ensure that this discount, subsidy, palliative or stimulus arising from price differentials gets to the right persons and not another avenue to pay subsidy on what is not imported...NNPC recordss should be Audited to determine port of loading...Bill of lading..vessel numbers and date of arrivals...Evidence can be obtained from outside Nigeria so that we do not pay subsidy on Fuel that did not arrive here.
12.The next thing is to ensure that we have functioning refineries because in basic economics, the closer the raw material, the lower your production cost.You cannot continue to import finished products and you sell raw materials to another countries.
It defiles any form of economic sense anywhere in the world.
13. I will end with my ORANGE ANALYSIS...Only a fool will desire orange Juice and after planting the orange, harvest the orange..
THEN FOOLISHLY sell the orange to another country and then FOOLISHLY import orange Juice...That can be defended if you do that for like 5 years from the time you discover oil but since 1956...?...Way too long to have built up to capacity of consumption and in fact export to other countries .
There is no other foolishness than to import what you should be exporting. The day a mad man realise that he is mad, that is the day of his healing.
14.We need to know it is time to be free from bondage and get serious like other sane countries.
We need to allow smaller refineries to start even if it is to take care of consumption in respective states of locations.
States like Rivers, Akwa Ibom, Delta, Ondo, even my State around Ogun Water side should think of building a small refinery to supply the entire state.
That way, we would end the "fall and fall" in the Naira because it has stopped rising against the dollar long ago and that is because of balance of trade that is negative as we import Petrol that we ought to be exporting using Foreign Exchange ; thereby putting pressure on the CBN management team to defend the naira...There is no logic in what we are doing at all.
15.Nobody should come to defend any nonsense anymore.It is time to be truthful and do what is right.Deception should end now.
Dr.Gbenga Adeoye holds a Bachelor's Degree in Law. Holds an MSc in Banking & Finance & a PhD in Management Accounting.
He is a Fellow of The Institute of Chartered Accountants of Nigeria.(FCA), Fellow of the Chartered Institute of Taxation of Nigeria( FCTI) & an Arbitrator of UK and Nigeria.
He believes that Transformation and Economic Development is a function of the Quality of Leaders in any entity whether Public or Private Sector.
He is passionate about Tax Justice and Economic Development of Africa in general & Nigeria in particular.
He could be reached by e mail on gbengaadeoye@yahoo.com
Or by Phone on 08034050773
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