My Deregulation And Oil Subsidy Conundrum – Femi Gbajabiamila

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Femi Falana Condemns Illegal Fuel Price Hike

Over the years, I have been vociferous and faithful in my near fanatic opposition to the deregulation of the downstream oil sector if what it meant was the removal of fuel subsidy. If deregulation could be achieved without subsidy removal, I was on board. I argued passionately against its removal at a time when most economic experts, talking heads and commentators were for it and when it was fashionable to support it. I have attached a copy of a rather caustic and scathing article and letter I wrote in 2010 to then Acting President Jonathan. I was at that time in the opposition and the then Leader of the Action Congress in parliament. I will restate my position at the time.

I felt there was something wrong with the notion that a country blessed with a natural resource should lack that resource or any of its by products. I believed that the citizens should have a marked advantage in the utility and consumption of that product over citizens of other countries not so blessed, and to that extent the pricing of that product found in the country’s backyard should be different from international pricing.

I gave examples such as the cost of tea in China, coffee in Brazil or coal in Sunderland. I felt as I still do, that there was something intrinsically whopped to have a natural resource in one’s backyard and at same time import same for consumption. It doesn’t make sense to me. I argued then and I still argue that if subsidy is to be removed, we must put the cart before the horse and get our refineries working so as not to import our own God given resource. Then perhaps after that we could entertain a debate on subsidy removal. Even then many of us would still have argued for subsidising even the production as opposed to its importation

During the 2012 subsidy debate, I argued vociferously and with a strong conviction that the idea of palliatives was irrelevant as the palliative measures proposed by the government then such as child care, transportation etc were things that belonged to citizens as of right and which government under Chapter 2 of the constitution were obligated to provide and therefore government was in no way doing Nigerians a favour, as you cannot give me something that’s already mine or at least should be and call it a palliative.

I further argued that subsidy connoted something negative only in Nigeria and not in other countries that subsidised one thing or the other for the benefit of citizens. There is and has been, for years, subsidy for transportation in the UK, agricultural subsidy in the US, and oil is subsidised in practically all major oil producing countries, and we don’t hear as much as a whimper. Why then Nigeria? Proponents argued because it is riddled with fraud and corruption and benefits only one percent of the populace. I bellowed back, well then why don’t you block the loopholes for the perpetration of the fraud and corruption? Why must the innocent 99 percent and poor masses suffer or be penalised for the inefficiency of government and the corruption of a few. Is it possible to argue that a government with all the might and power at its disposal cannot deal with this one percent? I couldn’t get a reasonable answer.

For me every spirited attempt to justify a removal of subsidy failed the common sense test or question of why Nigeria the fifth or sixth largest producer of crude (and the finest one at that) would be importing what it produced. There was definitely something nonsensical about such a proposition.

This was the position I held on to steadfastly over the years. It is now 2016 and if my position has changed to an extent, I owe It to my primary and larger constituents and indeed all Nigerians an explanation for the change.

I was at the Presidential Villa on Wednesday May 11th where a stakeholders meeting involving the leadership of the National Assembly, governors, Labour leadership, minister of state for Petroleum, ministers of Information and that of labour held. The meeting was chaired by the Vice President. It was a consultative meeting ostensibly to get the buy in of stakeholders. I was pumped and ready to challenge any proposition for an increase in pump price and my position was known to most people I spoke with.

However by the time the Honourable minister for petroleum finished his doomsday prognosis and gave a graphic account supported with facts and figures of where we are and where we would be in a matter of months if we did not alter the approach or fundamentally change the status quo, I had no option but to capitulate. It was the first time I had been confronted with such a gloomy picture. I found myself between a rock and a hard place. The facts were incontrovertible and the prognosis and consequences dire.

We were in an economic cul-de-sac and the country was spiraling down fast due to no fault of this present administration. In fact it was clear that any responsible administration needed to apply the brakes, bring this to a screeching and painful halt and at least for now remove subsidy and deregulate. It was a short term remedy which, all things being equal, would produce a long term solution when the economy would have recalibrated. I struggled with my inner angel and knew this was the only way out.

It was made abundantly clear to all seated that in two months there would be no federal allocation to states and no state would be able to pay salaries, including the buoyant ones. The Nigerian nation was on tenterhooks. That’s how bad a picture it was. Indeed I was the first to ask questions after the presentation still looking for a way out when I knew there was none.

Whilst I still believe in the principles I held on to so passionately years ago, including the need to bring any deregulation exercise in conformity with the law and the constitution, I believe this is such a time when we should look at the times we are in and our practical situation as a country. I believe (without sounding Trumpist) that Nigeria will be great again but we must rejig and reboot our economy and take another look at the subsidy regime. Many will say, but why did some of us kick in 2012 and if it was not good then why is it good now?

It’s a great question and they are right, but again the times are different. In 2012, we were earning a lot of money from oil. Oil was selling at about 100 dollars or thereabout. We had foreign exchange and petro dollars to continue with subsidy. Now things are different. The economy is comatose and Nigeria is on life support. Oil is selling at below 40 dollars and the currency (dollar) needed to purchase the refined petrol is no longer available.

I want to plead with my constituents and all Nigerians to work with government. You are the most important stakeholders, never mind those of us that gathered around a long table and cushy chairs in the Vice President’s Office on Wednesday May 11th to take this far reaching decision. We did so only in a representative capacity. I urge that you please give this government the benefit of doubt and lets take a chance on whether or not the analogy and parallel often drawn by proponents of deregulation in the oil industry to telecommunications industry may end up a truism and that the price of fuel in a laissez-faire, free market will come crashing in months. Lets consider it a temporary sacrifice for the greater good, with the hope that as promised we will be better off in the long term. This problem is not peculiar to Nigeria. It is instructive that other oil producing countries e.g. Bahrain, have been hit hard by the crash in oil price and are towing the same line and reviewing their subsidy policies.

With this new development I intend to fight with all I have for a review of the minimum wage of all workers in Nigeria. Our country was built on social justice and I cannot, no matter the realities, accept a situation where the cost of living will be increased without a corresponding increase in wages. The sacrifices that we need to make must be comprehensive. Indeed I believe the “wealthy” must not only pay their fair share of taxes, if need be, there must be an upward review of taxes paid by the highest income earners to enable government review the wages of those on the lower rung. It is time to be our brothers’ keepers.

I know this is a painful road to take and I hate that I have to flip flop on this one, but isn’t what they say “no pain, no gain”.

Femi Gbajabiamila is Leader of Nigeria’s House of Representatives, Abuja;

The views and opinions expressed here are those of the author and do not necessarily reflect the official policy or position of



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