The 4 Trillion Naira Petrol Subsidy That Can Build A Modern Refinery For Nigeria.

By Akintayo Balogun Esq.

On the 14^th day of April 2022, Nigerians were greeted with the news of the approval of N4 trillion by the Senate and the House of Representatives to fund the fuel subsidy in 2022. On the 31st of December 2021, President Muhammadu Buhari signed the 2022 Appropriation Bill of N17.126 trillion into law. In the said budget passed into law, the sum of N442.72 billion had been approved for subsidy. This fresh approval by the National Assembly indicates an increase of N3.557 trillion from what was earlier budgeted for. It was reported that the approvals by the National Assembly were made in response to President Muhammadu Buhari’s request to the lawmakers to make adjustments to the 2022 fiscal framework, due to new developments in both the global and domestic economies. The lawmakers increased the oil benchmark from $62 per barrel to $73 per barrel and approved that oil production volume increase by 283,000 barrels per day. That is, from 1.883 million barrels per day to 1.600 million barrels per day. This development has inconspicuously increased Nigeria’s 2022 Appropriation Bill from N17.126 trillion to N20.683 trillion. In addition, the National Assembly approved a cut in the provision for Federally Funded upstream projects being implemented by the Federal Government by about ₦200 billion from ₦352.80 billion. In other words, it would cost $9.6Billion at the official exchange rate, to subsidize fuel for 2022 as approved by the National Assembly.

Upon reading this report and particularly the humongous amount being approved for fuel subsidy for a period of just one year, my thoughts went to the ongoing construction of a standard refinery by Nigerian business mogul, Alhaji Aliko Dangote. It is reported that an estimated sum of $10 Billion USD (N4.1 trillion), excluding $2.5 Billion for Fertilizer and $2.5 Billion for the pipeline, would complete the construction of the said refinery, which is expected to take off production by the end of 2022 or early 2023.

The way startling and magical things are happening in this country without anyone raising an eyebrow or confronting the polity is shocking. It is like Nigerians have “gba kamu” (accepted/surrendered to fate) in whatever mystical piece the government of the day has to offer.

Going back to recent history, the people that now make up the contemporary government in Nigeria had promised to build new refineries and repair the 4 existing ones during their campaign. The 4 existing refineries have a combined capacity of refining about 530,000 barrels at maximum production per day. 7 years down the line, we have no functional refineries and no new refineries built or under construction, save for the one being privately built by Alhaji Dangote. All these political promises are still waiting to be fulfilled 7 years down the line. One of the strong arguments of the government back then as opposition, was that there was nothing like subsidy, the entire procedure was a rip-off and a laid-out plan to siphon funds through friends, cronies, and families. Suddenly, months into power, they started yelling that subsidy must be removed. With utmost respect to these leaders, it is either they told so many lies just to seize power, or they knew nothing about governance. Now the reality of governance is dawning on them.

Be that as it may, we now all believe subsidy really exists and fuel must be subsidized for it to be reasonably available to Nigerians. However, using the same amount of funds that can build another refinery to simply subsidize fuel for just ONE YEAR, does not sound like a good, reasonable, or responsible economic decision/policy. Which decision would pay Nigeria better? Money to subsidy fuel for one year or refineries that would last Nigeria and Nigerians another 100 years. Using funds that can save the economy for decades to come to take care of a one-year problem is nothing but a lack of vision and strategy.

According to the letter received at the National Assembly from the President, one of the reasons for the additional subsidy fees is occasioned by spikes in the market price of crude oil, which were a fallout of the Russia-Ukraine war. Question; why should the Russian-Ukraine crisis affect the prices of the same crude oil that we have in our very ‘domot’ (right in our homestead)? I am finding it difficult to understand or fathom the correlation.

Interestingly, the manner, speed and quiet ease with which the National Assembly approved the request for the fuel subsidy was shocking. We never heard of the commencement of the process. All we heard was the approval. When was this application made to the house? When was it debated upon? Where there no dissenting opinions? So many questions bothering the mind at the velocity in which it was heard and approved by both houses. 4 trillion Naira, the same amount that formed the Nigerian budget some 7 years ago, now being approved for subsidy ALONE, is rather unsympathetic, unfair and a cutthroat to the lean and dying Nigerian economy.

The reason for the fuel subsidy may not be totally unreasonable, but it still does not sound as the best action to be taken by a government that should understand that subsidy has never and will never be the way forward for Nigeria. Nigeria should deal with its problem frontally by channeling its funds into building modern and standard refineries, as well as making genuine efforts to repair its broken down refineries. This would serve the country a thousand times over, than relying on a compromised damage-control procedure called subsidy.

In summary, the money approved by the National Assembly (and a little top-up) which will be exhausted within ONE CALENDAR YEAR, can establish a standard modern refinery for Nigeria that would last several decades and possibly wipe out this subsidy quagmire. Instead, our leaders have chosen to blow up the entire money on fellow businessmen, friends, families, and loyalists in the name of subsidy. We can only hope that we will have leaders in the coming year that will stand up to these abnormalities because it is obvious the current crop of leaders have no reasonable or lasting solution whatsoever to the problems that have bedeviled the downstream sector of Nigeria.

God help Nigeria.

Akintayo Balogun Esq., LL. B (Hons), BL, LL.M, is a legal practitioner in private practice based in Abuja, FCT. A prolific writer, public affairs analyst, and commentator on national issues. akinson6@gmail.com.