A major decision is about to be taken and President Goodluck Jonathan appears to be preparing the minds of Nigerians for it. Last week, he emphasised at the inauguration of the May and Baker Pharm Centre in Ota, Ogun State, that Nigerians should brace up to the challenges of making Nigeria productive again. “We have to take certain hard decisions that probably to the ordinary person, will appear painful at the beginning but which definitely will end quite rewarding.”

Although Jonathan did not give details, it is believed that one of the painful decisions the country will soon make is the removal of fuel subsidy.  Fuel subsidy has been a controversial subject. The argument often is on whether fuel subsidy should continue? Some even wonder if there is anything like fuel subsidy. There are also those who ask if it is right for a country which produces fuel to deny its citizen the right to buy fuel at a subsidised rate? Why can’t government fix the refineries before attempting to remove fuel subsidy? Are Nigerian masses benefiting from the fuel subsidy? If not who is? Will the situation be allowed to continue as it is with the claim that government is losing a lot of revenue from fuel subsidy? What are the right things the government should do before removing the fuel subsidy? 

The answers to these questions have been provided by both the proponents and opponents of fuel subsidy since the debate on the issue started in 1973, but they don’t seem to have ended the debate. There has never been a meeting point as both sides have held on to their positions. The proponents insist there is subsidy while the other side does not believe that there is no subsidy. For instance the late Gani Fawehinmi, SAN, who along with labour leaders championed the no subsidy removal’s cause in his book Petrol Price Increases in Nigeria: The Truth You Must Know, debunked official reasons for increasing the price of petrol. According to Fawehinmi: “all the proceeds from increases in prices of petroleum products including petrol had never been used to remove poverty of the masses of our people. As a matter of fact, they have made the masses of our people spectators in the socio-economic activities instead of being participants. Price increases have never promoted our economic well-being from 1978 to date.” 

Fawehinmi was not totally wrong. All the successive governments had shown no political will to go the whole hog and deregulate the downstream sector. A policy of deregulation will be more beneficial for the nation and the masses in the long run instead of periodic increases which lead to nowhere.

The debate on removal of subsidy started during the military regime of Yakubu Gowon when the pump price of fuel moved from 6 kobo to 9.5 kobo. In 1978, Obasanjo, then military head of state, moved the price to 15.3 kobo.  Ibrahim Babangida, former military president, came in 1986, he increased the price four times. The first, second, third and fourth increases were 39.5 kobo, 42 kobo, 60 kobo, 70 kobo, respectively.

In 1993, Ernest Shonekan, former head of interim government, raised the price of fuel to five Naira. The late Sani Abacha reduced it to N3.25 and later increased it to N15 and later reduced it to N11 in 1994. Abubakar increased it to N25 in 1998 and then reduced it to N20.

From 2000 to 2007, Obasanjo changed the fuel price 14 times, pegging it at N30 initially before reducing it to N25. Subsequently, it was variously changed to N26 in 2002, N40 in 2003, reduced to N34 and increased to N39.50 and finally ended the year with the price at N41.50. The price was reduced in 2004 to N40 and later increased to N48.50. By 2005, fuel was selling at N52.50 and later N67. By 2007, it was reduced to N66.50 and later to N65 but was again increased to N70. President Umaru Yar’Adua later in 2007, pegged the price of fuel at N65. Now that Jonathan is contemplating on the removal of fuel subsidy, what is the right price? Olusegun Aganga, former minister of finance, recently said in London that subsidies which stood at N1 trillion in 2009 would fall to about N520 billion, according to Central Bank of Nigeria, CBN, estimates. Aganga said that removing fuel subsidy will push up the price of fuel to between N115 and N120 per litre. 

While labour unions are the one leading the resistance against fuel subsidy, the corporate world is very much in favour of removal of fuel subsidy. Recently, corporate eggheads like Wale Tinubu of the Oando Group, and Aliko Dangote of the Dangote Group of Companies have been preaching the gospel of total deregulation of the industry via different forum. The truth is that deregulation is needed in the industry to plug leaks which created means for corruption in the industry. If the leaks are plugged, the country will be able to stop corruption in the system and rake money to implement developmental projects that will benefit not only the masses but every Nigerian.

 But deregulation is not a one-sided story of benefits. It could also lead to higher cost of goods and services which could make life much more unbrearable for the people. A big jump in cost of transportation could also have adverse effects on all other services and commodities. Cost of production will also rise and so will the cost of manufactured goods. The truth is: whichever way the decision goes, there is always a price to be paid by either the government or the people. Who then will carry that burden - the government or the people?