President Bola Tinubu ended the system of oil subsidies just over four weeks ago. It wouldn’t have seemed out of place for many Nigerians had Tinubu waited a little longer before plunging them into the pit of expensive petrol per litre given how long his predecessor had toyed with and abandoned the idea.
It’s quite a jump from 183 to 500 naira per litre. Millions of Nigerians had flocked to the streets when the cost was half what it had been in the past. No Nigerian leader dared to enter the feared territory of eliminating oil subsidies, let alone rush in as Bola Tinubu did shortly after taking over the reins of government.
The removal of oil subsidies was postponed at least three times by President Muhammadu Buhari during his final year in office. Nigerians had no doubt that his previous failed attempt had become a booby trap for whoever succeeded Buhari due to the conflicting messages coming from the presidency, the Ministry of Finance, and the Nigerian National Petroleum Corporation, or NNPC, on the one hand, and oil marketers on the other. Many Nigerians were left wondering and projecting in pity what turbulent ride Bola Tinubu was bound to encounter after he was declared the winner of the 2023 presidential election because of the sinister decision not to take action.
The lack of action on the oil subsidy issue by a government and a president who were still negotiating loans and signing agreements on behalf of Nigeria up to its last few hours in office seemed completely foreboding and dangerous in light of his struggles and everything he had to endure shortly before, during, and after the election. By omitting any mention of the oil subsidy regime from the 2023 budget, President Buhari effectively put an end to it. However, at the end of June—one month after he would have left office—he left it up to his successor to carry out (complete with all of its menacing details).
Nothing could have been more cowardly or demonstrated that the decision was a hot potato than the administration’s lack of resolve. Bola Tinubu, however, approached the situation cautiously and possibly naively. Everything could have easily collapsed in on itself. His words about ending the oil subsidy came across as urgent and very direct. similar to a decree in some ways. Without ceremony, it had a nearly immediate impact. Fueling stations wasted no time in adjusting their gauge and jerking up the metres.
In retrospect, it was possibly the right thing to do. It left no room for the customary arguing and endless reflecting on the suffering that would follow such a difficult decision. Additionally, it prevented labour leaders from gloating and pretending to be fighting for the common man while lining their own pockets. Nigerians were prepared to face whatever awaited them in the forest of exorbitant oil prices because they had already suffered beyond all comprehension. Although shocking, the outcome was much less distressing than what some had envisioned as Armageddon. Within days, Nigerians began to weather the storm, as they have been doing one month later.
The president’s bold decision would soon receive praise, and it appeared to be a good choice, leading some to wonder why it hadn’t been made sooner. The situation was starting to seem just right. The president’s “immediate effect” actions, such as the decision to unify the exchange rate and to give presidential approval to a student loan programme, among others, have garnered more support from Nigerians than criticism. These choices now appear to be so wise and fruitful that President Bola Tinubu bravely claimed ownership of the decision to remove subsidies.
Nigerians now know that when he declared the end of the subsidy regime in his inaugural speech, he disregarded the advice of his advisers to keep quiet about the divisive subject. We are limited to making conjectures about the president’s position and response had his words towards Nigerians taken a different turn. Would he have claimed they were taken “out of context” or would he have owned them? He could have claimed that those words were inserted by an incompetent speechwriter without his knowledge, or he could have simply acknowledged that he spoke too much.
Nigerians have only chosen to put off their own desires while embracing the discomfort of their current situation by choosing to support the president for the difficult choices he has had to make on their behalf. These series of economic choices have the immediate effect of leaving them in financial turmoil, but they are unable to yet see the promised benefits. Nigerians are currently more economically exposed than they have ever been. They view the results of the Tinubu administration’s recent monetary and fiscal policies, which are pushing the nation even further into the neo-liberal orbit of the West, as the bitter pill that must be swallowed before the process of the country’s economic recovery.
This is not the same as advocating for Nigerians to be left unprotected from the market forces that are the bears of western capitalism. Government policies that would prevent them from becoming victims of strong economic entities operating singly or collectively from within and especially from outside the nation are necessary if they are to protect them. To then attempt to raise the price of electricity by as much as 40%, as is planned to begin next month and so soon after the removal of the oil subsidy, cannot help but further the precarious economic situation of Nigerians.
The electricity companies (the GENCOS and DISCOS etc.) that bought the government-owned monopolies National Electric Power Authority, NEPA, and the Power Holding Company of Nigeria, PHCN, have been largely dependent on government support, read subsidy, for the entire decade of their existence. But despite earning less than 40% of what the old power monopolies did in terms of revenue, they have never made a profit. Abuja compensates for the income shortfall in the same way that it did for gasoline up until a month ago. Abuja, however, has chosen to stop its support because it is weary.
However, now is not the appropriate time for this. President Tinubu must be careful not to push his luck too far or too quickly, even though it may seem like he got away with his decision to remove the oil subsidy and the potential increase in the cost of higher education. If not, he might be biting off more than he can chew. He was capable of moving quickly.