Fuel Subsidy: Between the Military and Agbada Dictators

Malam Aminu Gandhi offers another perspective to the oil subsidy debate

There is so much behind the issue of subsidy removal in Nigeria. As you may be aware most of the
western countries with the current troubled economies have large number of refineries. Originally
they import crude oil to refine and take what they need to power their industries, heat their homes,
power electrification plants and export what remains which is in most cases the PMS (Petroleum
Motor Spirit). Now with the fall of Libya into their hands, they are certain of having cheap oil from
Libya. At the moment, the fossils markets within the western countries is shrinking because of
economic issues bedevilling them, reduction in sectoral demand for energy (transport especially) and
different environmental regulations governing the use of fossils within the EU countries (refer to
Kyoto Protocol and EU’s target of 20-20-20). With this, the only way their refined products (gasoline
especially) can scale through is only by having a high priced market countries like Nigeria where they
can make billions of dollars to keep their refineries working and also to keep their people in
employment as well as boosting their economies. It is vivid that Nigeria is Africa’s largest
consumer of PMS (Petroleum Motor Sprit) and one of the big world markets. As most of these
countries with high refining capacity export the gasoline to those countries in need, however if they
can come to Nigeria where price is artificially high, population is high and the market is big, certainly
billions of dollars for them are assured. As an Energy Risk Analyst with some knowledge of the oil
and gas sector and also with so much interest in Petroleum Economics I do not even believe with the
existence of Oil subsidies in the Nigerian context. Take for example the UK’s case where a litre of
PMS is £ 1.31 per litre which is equals to =N= 331.56 per litre. Below is the simple PMS price
calculation per litre in the UK by the side Naira equivalent will be put the current exchange rate as at
17th December 2011 is £ 1 to =N= 253.
Below is the simple calculation of gasoline price is:
UK £ =N=
VAT 20% 0.26 pence 65.81
Fuel duty 0.76 pence 192
Total tax £ 1.2 pence 303
Remaining 0.29 pence 73.4
Retail Price £ 1.31 pence 331.56
In the remaining you have to calculate the cost of transportation, cost of labour and possibly rent in
consideration to the high cost of labour and all these factors in the UK. Similarly one must have to put
in mind that this UK is a net importer of Petroleum products because most of its oil fields in the North
Sea are near depletion.
France € =N=
Vat 19.6% € .30 64.06
Fuel duty 55% € .87 185.77
Total Tax € 1.17 249.82
Remaining € .41 87.54
Retail Price of Litre €1.577 336.73
The current exchange rate of euro to naira as at 17th of December 2011 is €1. to =N= 210.73. In
France as well one needs to consider the cost of transportation, cost of labour, cost of rent and profit
margin. In virtually most of European countries the difference is not much just like Germany where
the retail price of gasoline is € 1.5 per litre, the VAT is 19% and fuel duty is in figures € .48 per litre.
In the war torn Libya the price of gasoline per gallon is still $ .33 which is equivalent of =N= 53.49.
In Libya despite the negligible VAT rate of 4% nothing like fuel duty do exist.
In Australia the gasoline price differs between the premium unleaded petrol and unleaded petrol the
price of unleaded petrol is $ 1.27 per litre while the price of premium unleaded is $ 1.33. in this let
us take the premium unleaded.
Australia $ (Australian Dollar) =N=
VAT 10% $ .13 21.19
Fuel duty $ .53 86.4
Total tax $ .66 107.59
Remaining $ .67 109.00
(TPG)i Price of Litre $1.33 216.81
In Australia some regions charge carbon Tax, and that depends on the region’s tax regulation. We
should not forget that there is cheaper gasoline of $ 1.27 per litre.
Saudi Arabia SR =N=
VAT 0%
Fuel Duty 0%
Retail Price per Litre SR 0.46 =N= 19.88
I do not want to give the account of Venezuela my self it will be fruitful if one can log on-to this
website your self and see it with your eyes.
In all these countries that we try to foot-copy and mimic, they have their system completely working;
everything is functioning ranging from security, sound transportation system, employment, effective
Healthcare system, subsidised agriculture, social security system Road safety etc.
Now going back to Nigeria where VAT (Value Added Tax) is still 5% and instead of charging fuel
duty the Government of the day says they subsidising these products. Also in close shoulder
comparison with the western countries which do not have oil, yet they have been able to make their
environment economically and socially habitable. Can you please figure out an iota of truth in this
fuel subsidy existence matter in Nigeria? This is the country that deliberately refused to take back
Nigeria’s refineries into functioning ones from their current museum-like looks. Can you remember to
ask of the whereabouts of PTF monies?
If the current Government is serious and sincere about reclaiming the lost oil revenue, the one biggest
and best solution is the passage of the un-watered PIB (Petroleum Industry Bill). By doing that, they
will be able to reclaim not only the so-called lost-to-subsidy trillion naira, but nearly a trillion dollar
that is lost to naught as a result of IOCs (International Oil Companies) non-disclosure of their
activities will also be reclaimed.

Jonathan might have good intention for Nigeria, but is possibly deprived by many factors which may
include bad and blind or myopic advisers, reliance on external support for decision making,
pretense (Mr President pretends that he is brave and that he knows all) and absolute forsightlessness
of his Government, which at the end of his tenure may equal to nothing. Removing the subsidy is not
even an issue, but who will handle the funds is there anyone to be trusted now? The Government is
just trying to gamble with the live of the nation and survival of the citizens through a daydreaming of
building French-like Castles in the air, but unfortunately all the six months long rhetoric for
persuasion have not been sweet to the ears, rather they have been sounding like death announcements
to Nigerians talk less of convincing their minds, hearts and psyches.
The basic fact and my conclusion on this fuel subsidy removal issue is that Mr. President and his
government are seriously bent on satisfying its pay masters by instilling much hardship and acute
poverty on the poor Nigerian citizens including the unborn. Certainly, it is a glaring fact that the
population of those Nigerians that live below =N= 100 per day is more than that of those that live
below $1 per day. I remember J.F Kennedy once said “if a free society cannot save the many who
are poor, it cannot save the few who are rich”
Increasing the fuel price to such dream-like amount will amount to the manifestation of different
ailments and illness on the people and the country. This is a country where everyone pays for his/her
education, where everyone pays for his/her health care, personal security as well as life and social
security, and nothing seem to be working, yet the government is insisting on increasing the pump
price of gasoline by more than 100%, the only thing people enjoy from government. Nigeria of today
is the very country where people provide themselves with power to light their houses most commonly
with the small generator “I BETTER PASS MY NEIGHBOR.” Everything in Nigeria of today
revolves around petrol (PMS) from farming to transportation, from Healthcare (which people provide
for themselves) to Education. Yet, The Economic Team is still ill advising Mr. Jonathan on removing
the fuel subsidy. Everyone knows that a little mishandling of the oil prices figures upward in Nigeria
will most certainly deteriorate EVERYTHING. And unfortunately Mr. President has already over
estimated the ability of his super Minister (Mrs Ngozi Iweala) whom I believe is, but an agent of
destruction. A simple description of her is like someone that stabs himself/herself with a dagger and
still hails himself/herself as hero or heroine.
Even with the so-called subsidy our people in Nigeria are becoming No work, No food, No hope No
dream! However, if satisfying the needs of ones paymasters is something to go by and the ultimate dream of this government, I think one can go to Egypt and learn from the still living Hosni Mubarak not even the exiled Ben Ali of Tunisia. The fuel pump price increase if successfully achieved by Jonathan’s led Government may possibly be the matches that will light the already spilled revolt fuel on the lands and waters of Nigeria and the consequence may be ugly and regrettable.

Because I do not think the Government can contain the mass opposition of this anti-people and
ungodly policy. They (People in Government) should put in mind that even the security agents
(police, soldiers etc) they want use against the NLC and possible protesters opposing this anti-human
policy will be severely affected and from the look of things the story will be different this time

Therefore in order to avoid any foul play and wrong doings from both sides (Government and
oppressed Nigerians) The Government should give this anti-people policy a second thought before the
country is finally thrown into the final political, social and economic abysmal depth. Kennedy also
said “those who sought power by riding the back of the tiger ended up inside”
At the moment can anyone distinguish between the present democracy and previous military
dictatorship? In fact many prefer military dictatorship than this Agbada dictatorship. A word is
enough for the wise, and Charcoal is enough for the white! Let everyone knows that we have
no other country but Nigeria it is our Fatherland and the Land of our Great grand generations yet
unborn. There is no other place we suppose to love like Nigeria lets be patriotic and work on the
survival and success of Nigeria.
May God see us through, Amen!

Mallam Aminu Gandhi
Is from Centre for Energy Petroleum Mineral law and Policy
Dundee, Scotland
December 2011
i Terminal Gate Price is the retail price per litre

About the author


In the beginning...Let there be Light

Leave a Comment