Fuel subsidy policy was a failure, says CISLAC

A transparency group, the Civil Society Legislative Advocacy Centre has described the subsidy policy on petrol in Nigeria as a failure.

According to a statement released by the group on Friday, titled, ‘CISLAC Response To Proposed Subsidy Palliatives’, and made available to The PUNCH, the group said while other developing countries of the world introduced consumer subsidies to improve the welfare of their citizens and alleviate poverty, among other reasons, petrol subsidy in Nigeria failed to address or solve any of the reasons it was introduced in the first place.

The PUNCH reports that President Bola Tinubu wrote to the House of Representatives on Wednesday, seeking approval of N500bn to cushion the effects of petrol subsidy removal on vulnerable Nigerians.

Tinubu’s request was contained in a letter sent to the National Assembly and read during plenary by the Speaker of the House of Representatives, Tajudeen Abbas.

The president announced the petrol subsidy removal during his inaugural address on May 29, 2023.

However, the statement signed by the Executive Director of CISLAC, Auwal Ibrahim Musa (Rafsanjani), reads: “While welfare, poverty alleviation and election cycle politics largely underpin the reasons for which consumer subsidies are introduced in developing countries, it has been a fool’s errand in Nigeria’s case as it has failed to address any of the issues that birth its introduction.

“The arguments for the removal of fuel subsidy have always bordered on the need to free resources and take necessary steps towards long-needed reform, since the country can no longer sustain the cost, especially as the economy braces for a possible recession.

“It is expected that the fiscal space created by the subsidy withdrawal must be provided for wider public goods and the resources saved could be reallocated to those groups most affected by the reform by adopting complementary measures.”

The statement added that one major challenge the Tinubu administration currently faces is winning the trust of Nigerians.

It also stated that because 27 per cent of Nigeria’s average household budget is dedicated to fuel-related expenses, subsidy savings should be reallocated to fixing the challenges faced by the energy and transport sectors.

“However, a real challenge the present government faces is winning the trust of the people who want to know that the government has a credible and sustainable plan. With 27% of the country’s average household budgets dedicated to fuel-related expenses (petrol-powered generators and vehicles and heavy reliance on the poor public transport system), reallocation of subsidy savings should be directed to fixing the energy and transport sectors as opposed to another round of jamboree in the name of succour.

Loans are being desperately sought to fix and build roads and rail lines, so there are concerns that the new government is mis-prioritizing the utilization of sparse funds that may only end up lining a few pockets,” the statement said.