Fuel Price Increase and the Mass

Fuel Price Increase and the Mass Rejection of Suffering

Izielen Agbon

Twitter: @izielenagbon

There is a subsidy on corruption in Nigeria. The corruption subsidy is the difference between the true price of petrol and the official pump price set by the FGN. This subsidy on corruption goes to the fuel cabal as increased fuel prices. The fuel cabal makes additional profits by selling at actual pump prices that are higher than the official FGN price. The key question facing the nation today is- who will pay for the corruption subsidy? The FGN has refused to pay for the corruption subsidy. It insists it has no money. It tried to fight the corruption of the fuel cabal in the downstream sector. Corruption fought back and corruption won. The FGN have surrendered and agreed to all the demands of the fuel cabal. The fuel cabal can now do what it wants. It can import petrol from anywhere, at any time and at any price. It can source its fund from the illegal black market. It can sell the petrol at any price it desire anywhere in the country. Last week, the FGN decided to transfer the payment of the corruption subsidy to the Nigerian masses by increasing the official minimum pump price from N87/litre to N145/litre.

In 2012, the FGN followed the IMF’s advice and raised PMS prices from N65/litre to N140/litre. The FGN justified the increase by saying it could not pay for fuel subsidy and oil prices were high. We argued that there was no fuel subsidy. What existed was a corruption subsidy enjoyed by the fuel cabal. We resisted the fuel price increase and forced the FGN to reduce the PMS price to N97/litre. NASS set up a commission of enquiry that exposed massive corruption in the subsidy regime and proved beyond any reasonable doubt that the so called fuel subsidy was actually a subsidy on corruption. As of today, no person has spent a day in jail for the massive corruption that was discovered in the downstream sector in 2012.

In 2015, a majority of the people voted for President Buhari. Buhari promised to fight corruption if elected President. He promised not to increase petrol prices to pay for the subsidy on corruption. President Buhari understood that when people say ‘remove fuel subsidy’, they mean that the fuel price should be increase and the masses forced to pay a corruption subsidy to the fuel cabal. He said. "When people ask you to remove subsidy ask them to define it. Who is subsidizing who? Let me make it clear. These people are gleefully saying 'remove subsidy' ....They want petrol to cost N500 per litre....If you are earning N20,000 per month and you are living in Lagos or Ibadan, the cost of transport to work and back, the cost of food. You cannot control the market women they have to pay what transporters charge them. But I am thinking more than half the population of Nigeria virtually cannot afford to live...Where will they get the money to go to work? How can they feed their families? How can they pay rent." . The people trusted Buhari and voted for him. His words should be his honor.

The IMF/World Bank, global capital and the fuel cabal were concerned about President Buhari’s position on fuel price increases and Naira devaluation. Global capital set its representatives to demand that President Buhari pay the corruption subsidy. President Buhari refused. The fuel cabal owns most of the fuel depots in the nation. Only 9 out of the 35 fuel depots owned by the NNPC were operational. The fuel cabal went on a big hoarding strike and began sabotaging the actions of the FGN. The IMF sent its Managing Director to Nigeria in January 2016 to support the actions of the fuel cabal. The IMF insisted that the FGN must increase fuel prices and devalue the Naira. In a statement, at the conclusion of her visit to Nigeria, the IMF Managing Director, Christine Lagarde, said. “The move by the government to remove the fuel subsidy is good. Those people who need the subsidy can receive cash transfer”. President Buhari refused to raise fuel prices or devalue the Naira. The fuel cabal intensified its offensive. Its members sold petrol at extraordinary high prices at night and shut down their pumps during the day. FGN Officials were bribed to look the other way. Longer queues formed at the petrol stations. The Nigerian masses suffered. The FGN surrendered to corruption and the fuel cabal. It devalued the Naira from $1/N200 to $1/N285 and increased fuel prices from from N87/litre to N145/litre.

The FGN justified the increase in petrol prices by saying it has no money to pay for the corruption subsidy and the fuel cabal could not source its dollars from official channels. The official exchange rate as per the Central Bank of Nigeria (CBN) is $1/N199. The interbank rate is 10.11% and the lending rate is 16.82%. The FGN changed the exchange rate to $1/N285. The Minister of State for Petroleum, Ibe Kachikwu, said that the FGN arrived at a PMS price of $1/N145 by “a simple conversion of using foreign exchange at N285. That N285 is from nowhere; it is basically the secondary source that people buy foreign exchange from, versus the N320, which is the black market rate. If you convert it and throw it in, you will get about N141, N142 or N143. So there aren’t much of palliative elements left there for you to use. It is simply, ‘go out, find your product, your cost is covered, there is an opportunity for your efficiency to make money, come and deliver.’”. This is economic nonsense. The main goal of our foreign exchange rate policy is to preserve the value of the Naira and our external reserves position without undermining our domestic economic stability. The goal of our foreign exchange policy is not to guarantee the payment of profits and corruption subsidies to the fuel cabal. Neither is it to give up our national sovereignty to the IMF.

Policies have serious economic and political consequences. IMF anti-people policies lead to mass suffering. When the FGN increases the price of kerosene (HHK), it undermines all previous FGN policies directed at uplifting and empowering Nigerian women. Nigerian women are primarily responsible for all unpaid/unwaged household work including cooking, cleaning etc. Therefore, they are responsible for sourcing the energy used for food preparation at home. Some women use kerosene for cooking. These women became invincible as they line up for kerosene at the petrol station. The IMF Managing Director, Christine Lagarde, did not see them on the queue. Neither do most Nigerian policy makers. If you are in the corridors of power, all you see are the men and their cars lined up to buy the hoarded PMS. A majority of Nigerian women live in the rural areas. They too are invincible to those in power. Our daughters are reduced to the status of our grandmothers. They spend many hours per day searching nearby forests for firewood. Such is the change imposed by price modulation. It is real, terrible, concrete and oppressive. It oppresses Nigerian women and leads to their underdevelopment.

Rural families are too poor to buy firewood. Millions of girls now miss school because they are looking for firewood for the household cooking. These girls are powerless and invincible. They will not walk the lecture halls of Harvard University or the corridors of power in Abuja. Their lives are full of great suffering and poor health. Cooking with firewood has serious health hazards. The Executive Director of International Centre for Energy, Environment and Development, Mr. Ewah Otu Eleri, explained, “only 5% of Nigerian household use gas to cook, while 25% use kerosene and the rest of the 70% use firewood".….Smoke is the highest killer of women, but unfortunately no one stands and advocate for these rural women, their trials are unreported. Presently Nigeria is in an energy crisis, no woman should die cooking, but with only 700 naira this calamity can be avoided.". These backwards health and educational results are the intended and unintended consequences of IMF anti-people policies. Generations of women are oppressed, as the uneducated girls of today become the uneducated mothers of tomorrow who give birth to the uneducated daughters of next tomorrow. The daughters of the fuel cabal receive the best education in the finest private and foreign schools.

Furthermore, when the FGN increases the price of PMS, it increases the prices of all goods. The multiplier effect in our non-industrial, one export commodity, enclave Nigerian economy is very high because energy inputs becomes very expensive. This undermines the very basis of recovery (increased government spending expressed by high budget capital expenditure outlays sourced as foreign loans) as employment gains are negated by inflationary pressure and stagflation trends set in. If the laboring classes spend all the benefits from the increased government spending on basic food and transportation, how is the FGN planning to put the economy on a path of sustainable growth. When FGN increases the fuel prices and the prices of the means of subsistence goes up, then waged workers suffer (if and when their wages are finally paid). Unwaged workers and farmers suffer more and most of them fall below subsistence level. Youths, students and women suffer. Sorrow and unproductive activities engulf the land. Life becomes brutal and short.

The FGN lacks the political will to fight corruption, the fuel cabal or the IMF. The increase in official petrol prices from N87/litre to N145/litre will impose unbearable suffering on us and our children. The increase does not make sense. It benefits only the fuel cabal. It transfers the economic problems caused by corruption and mismanagement of the Nigerian economy to our shoulders. It entrenches mass poverty amongst us and reduces us to a condition of servitude in our motherland. The FGN says that we must make more sacrifices and bear more suffering. We must reject this suffering. It is not our portion. We must refuse to pay a corruption subsidy to the fuel cabal. The FGN must rescind the illegal fuel price increase. We must support the strike action against the fuel price increase. We must make sure our labor and civil society organizations leaders do not sell out or back down under pressure. We must have no fear of the security forces. If we remain united and strong, we will win.