Emmanuel Addeh writes on the issues surrounding the recent removal of subsidy on petrol by the federal government, aggregating the views of the various opposing camps on the matter that has dominated national discourse for weeks
To be sure, the debate over the retention or removal of petroleum subsidy has raged for decades, with various thought leaders taking opposing sides of the very divisive subject.
In essence, while in some other parts of the world, a decision to review the payment of fuel subsidy may be a purely economic one, in Nigeria the highly charged issue goes beyond that, it is also a political phenomenon.
Opinions differ as to when subsidy, which is generally a sum of money or a form of buffer fund granted by the state to help an industry or business keep the price of a commodity or service low, crawled into the Nigerian economic lexicon, but what is not debatable is that it has dominated conversations in every government since the late 70s.
Although the debates were not as stringent and were far less exacting in the early days of the calls for fuel subsidy removal, because according to analysts, the country had lots of cash to play around with in the 70s and early 80s, recent developments, including dipping government revenues have brought to the fore the need to rethink the country’s spending.
Subsidy in BriefBefore the recent removal of subsidy from the pump price of petrol and government’s decision to fully deregulate, the Petroleum Products Pricing Regulatory Agency (PPPRA) kept a pricing template, which detailed the components used in deriving the daily/monthly guiding products prices.
It basically employed the import parity principle, which comprised elements like landing cost, margins for the marketers, dealers, and transporters and the jetty-depot plus through-put expenses It also included lightering expenses, Nigeria Port Authority’s (NPA) charges, cost of fund, storage margin, distribution margin, taxes, among others.
