Why Fuel Subsidy Must Be Totally Abolished

By Ikenga Chronicles April 14, 2018

Why Fuel Subsidy Must Be Totally Abolished

–Benjamin Obiajulu Aduba,

Subsidy is what makes people live above their means, and living above one’s means is seldom a good thing. But there are times when one may, of necessity, live above one’s means. Such times must necessarily be short.

The problem with the N1.4tn annual fuel subsidy is the word “annual”. This amount or similar amount will be needed in 2018, 2019 and as far as the eye can see. It is not sustainable.

Please note that I have not said anything about how it is spent. It is still a bad idea no matter how wisely it was spent. If it also includes a corruption element, that merely compounds the problem. You get more of what you subsidize, in this case more fuel scarcity.

If Nigeria spends N1.4tn once to help get over a shortfall in oil inventory to enable her build up the supply, that is a different ball game, but what we have is an annual event.

The long term solution to fuel scarcity is to do away with the subsidy altogether.

In the short run, (a few years) it will cripple the economy; force lifestyle changes for a lot of people; increase the price of fuel exponentially; and make everybody very uncomfortable.

In the mid-term (a few years) people will be riding bicycles; driving only when it is absolutely necessary; turning off electricity when not very, very necessary; searching for alternative energy sources; producing and conserving available fuel more carefully; etc.

The mid-term efforts will lead to stockpiling of fuel in the long term, which will bring the price down. And make fuel subsidy history. It would have inculcated in Nigerians the habit of conserving energy, a necessary and sufficient requirement for 21st century living.

It is being cruel in order to be kind. The current lifestyles of “owambe” in every village and town in Nigeria is unsustainable and needs to change to a more frugal living.

Abolishing fuel subsidy is one place to start.

 

  • Benjamin Obiajulu Aduba writes from Boston, Massachusetts
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