NIGERIA: SAME OLD SONG

NIGERIA: SAME OLD SONG

The promise of spending savings from subsidy removal on infrastructure and social safety nets has been presented as an anesthesia by every administration since subsidy removal was introduced into the national lexicon in 1986.

Former military president Ibrahim Babangida premiered it, when he claimed that at 23kobo per litre, petrol in Nigeria was too cheap, even cheaper than the price of a soft drink. Babangida explained that government was subsidizing petroleum products and that there was a need for that to stop so that the money saved could be used for infrastructural development. By the time he left in 1993, Babangida has raised pump price of petrol to 70k per litre. But the country was no better in terms of infrastructure. As recently revealed by former president Olusegun Obasanjo, there was no new investment in the Nigerian power sector throughout Babangida’s eight years in office. Ernest Shonekan, who succeeded Babangida, adopted the same excuse, raising the price per litre of petrol to N5 per litre from 70kobo.

In a move to sell himself to the distrusting public, the late General Sanni Abacha, Shonekan’s successor, slashed the pump price to N3.25kobo. But less than one year in office, Abacha also returned with the same argument. In October 1994, he increased the pump price of petrol to N11.00. He announced that “Freed subsidy” will be invested in infrastructure for the “masses” for which purpose he set up the Petroleum Trust Fund, PTF. The PTF, headed by General Muhammadu Buhari, attracted controversy aplenty, with allegations its interventions were concentrated in the northern part of the country. And except for the few road it constructed and facilitation of acquisition of buses on hire purchase basis by the transport unions in the guise of mass transit, the PTF did not leave any enduring legacy.

In fact, it was under Abacha that the railway system finally collapsed. Abacha’s successor, General Abdusalami Abubakar, raised the price of petrol to N25. But he reduced it to N20 in January 1999, following pressure from organized labour.

Then came Obasanjo. Under the pretext of freeing funds for investments in infrastructure, encouraging investments in the downstream sector of the oil industry and ending waste and corruption associated with subsidizing petroleum products more than 10 times during his eight years in office.

This was in spite of regular resistance by labour/civil society coalition. Obasanjo later adopted the trick of announcing an outrageous increase in prices, waiting for labour and the civil society to threaten mass action and then offering a marginal reduction. At the end of his tenure in 2007, petrol was selling for N75 per litre. But the promise of improved infrastructure did not materialize. If anything, obasanjo left the country’s infrastructure considerably worse state than when he took over in 1999.

Therefore the President Jonathan’s promise to invest savings from removal of subsidy on petroleum products is justifiably greeted with “WE HAVE HEARD IT BEFORE”.