Petroleum subsidy

Cambridge Dictionary has defined subsidy as the ‘money given by a government or an organization to reduce the cost of producing food, a product, etc., and to help to keep prices low’. The official price for petrol, also known as the Premium Motor Spirit (PMS), is N162 – 165 per liter. On March 5, 2022, BusinessDay Newspaper reported that the Nigerian National Petroleum Company (NNPC) claims that it pays N168 per liter as a subsidy and that the total daily petrol consumption in the country is 60 million liters. Accordingly, the monthly subsidy becomes N302.4 billion against an average of about N250 billion for the past recent months. This subsidy is expected to skyrocket as a result of the appreciation of the price of a barrel on the international market due to the Russian invasion of Ukraine and the subsequent banning of Russian crude oil by the US. Historically, General Olusegun Obasanjo introduced fuel subsidy in 1977 under his regime with the promulgation of the Price Control Act.

Subsidy removal & consequences

BBC Pidgin has reported that Nigeria spent about 10 trillion Naira on petroleum subsidies between 2006 – 2018. Former senate president, Dr. Abubakar Bukola Saraki, while appearing on the Politics Today program on Channels TV held in March, disagreed with the daily petrol consumption peddled by the NNPC. He purports that the actual daily consumption according to his findings does not exceed 30 – 45 million liters. According to him, fuel racketeers are the main beneficiaries of the subsidy. The smuggling of the product into the neighboring countries where it can be sold at much higher prices has been identified as one of the sources through which the subsidized product is being lost.

All previous administrations and regimes from 1979 to date have tried to remove subsidies by increasing the price of petrol. Complete subsidy removal is what the petroleum economists call full deregulation of the downstream sector of the petroleum industry. More than N3 trillion is expected to be spent on subsidies alone in 2022. The government claims time and again that its cash inflow cannot sustain the payment of subsidy on petrol and that it will surely remove all petrol subsidies in due course in a similar way that it removed all subsidies on power. Complete removal of fuel subsidy will surely lead to an inflation of market commodities, transportation, and some services. While subsidy removal will increase Nigeria’s gross domestic product (GDP), it will detrimentally affect household income, especially in poor households which constitute the majority of Nigeria’s populace.

 The current state of our educational system

Basic/secondary education

In August 2020, I wrote two articles in which I exhaustively shared my views on the state of our educational systems at the basic/secondary level and university level. The first piece is titled: Education, My Journey & the Present State of Affairs – Primary & Secondary Education (Part 1). I will reproduce some portions of the piece.

‘Let me begin by saying that anyone whose age is around 40 years and above, will – without any fear of contradiction – agree with me that the Nigerian educational system has been experiencing serious and continuous devaluation for at least the past 2 decades. The one-time excellent and qualitative educational system has been experiencing a sharp and rapid decline at all levels, viz, primary, secondary, and tertiary. Many articles have been written in the past to buttress the poor state of our educational system, I choose to add to the list of these articles by highlighting some salient points that require urgent consideration by all stakeholders especially the Government (at all levels: Local, State & Federal), parents and educational administrators, using this memoir. This is borne out of my 23-year teaching experience at all levels (primary, secondary, remedial, diploma, undergraduate, and postgraduate) in Nigeria and Saudi Arabia. Given the enormous challenges facing the educational sector, the need to urgently declare a “State of Emergency” in the educational sector cannot be overemphasized with a view to holistically overhaul the system such that our large population becomes our greatest asset rather than our greatest undoing.’

While reviewing the Kaduna State Government’s intervention in education under the leadership of Mal. Nasir El-Rufai, I have this to say.

‘There were 4,250 public primary schools when he took over as Executive Governor of the State in 2015, 50 % of whom were sitting on a bare floor due to lack of furniture. About 2/3, representing 67 % or 22,000 of the total 33,000 teachers were deemed ‘incompetent’ to teach after failing to score at least 75 % in a structured primary 4 examination. They were sacked to give way to the recruitment of 25,000 qualified teachers.’

Additional recruitment of several secondary school teachers has been undertaken and the new teachers have already received their appointment letters since August 2021 but up till now, they have not been posted to various secondary schools by the Ministry of Education to help in filling the manpower gap that has ravaged the public schools in the state.

On the infrastructural decay, I have this to say.

‘About 700 public primary schools have so far been renovated and the Governor’s effort in providing public schools with the required infrastructure and equipment has been commended by all irrespective of political party affiliation. Love him or hate him, he is truly a pacesetter and undoubtedly a visionary leader.’

However, providing adequate infrastructure and qualified teachers alone cannot guarantee the graduation of high-quality students from public schools. It is not unheard of to find a junior secondary school pupil who cannot write down his name correctly. State governments, most especially in the north, need to set some minimum learning outcomes for all primary and secondary schools using their quality control agencies and ensure that they are achieved otherwise all the investments in infrastructure and qualified teachers will be in vain. Do you wonder why Unity Schools, i.e., Federal Government Colleges (FGCs) produce high-quality graduates that can beat their counterparts from the best private schools? State governments need to understudy how FGCs are efficiently churning out excellent graduates with a view to improving the quality of graduates from public schools.

Tertiary education

The second piece which addresses the problems bedeviling university education is titled: Education, My Journey & The Present State of Affairs – University Education (Part 2). You may wish to spare some time to read this detailed piece if you did not read it before.

Core issues of ASUU struggles

Let me reproduce some portions from the piece I wrote on university education in 2020 when ASUU was on strike. These contending issues are still unresolved today and ASUU is already in its 2^nd month of another strike action.

‘These ASUU strikes which dominated the 90s culminated in the signing of an agreement between ASUU and FGN in 2001 with a view to reverse the decay in the university system, reduce brain drain by enhancing their remuneration, ensuring university autonomy and academic freedom, and to restructure Nigerian universities through massive and sustained financial intervention, among others. Also, the ASUU-FGN 2001 agreement was to be periodically reviewed every 3 years. Every right-thinking and rational human being who is conversant with the learning conditions in Nigerian universities will support ASUU struggles as per the above terms. Well, students may not be expected to be sympathetic to ASUU struggles for the obvious reason that their graduation will always be affected. As an undergraduate, I vowed never to join the union should I become an academic staff because of the 20 months added to my undergraduate residency period, due to ASUU strikes. When I joined as a lecturer in 2006, I deliberately refused to fill the ASUU membership form for the above reason but I was later registered automatically by the union by virtue of my being an academic staff. That membership allowed me to follow ASUU activities and struggles religiously until 2009 when I resigned from my membership in the union. ASUU embarked on monthly deductions in my salary for the building of its national secretariat in Abuja without following due process, we were not informed in writing before the deductions began. I hope to rejoin the union one day. Despite FGN’s acknowledgment of the rot in the university system through its needs assessment report of 2012 under Prof. Mahmud Yakubu’s committee, not much has changed. Since 2001 when the agreement was first conceived and ratified to date, FGN has been continuously reneging time and again which always leads to preventable ASUU strikes every now and then in the university education system and by extension, the remaining tertiary education systems run by Polytechnics and FCEs. To me, the simple way to curb and prevent these strikes that have bedeviled our tertiary education system is for the FGN, through the Federal Ministry of Education, to do the needful by providing the needed fund to turn around these universities for the better and improve the relatively ‘poor’ remuneration of the academic staff of universities. The current Minister of Education, Mal. Adamu Adamu accepted FGN’s failure in fulfilling its own part of the bargain in the following comment:

“I must confess that government has not fulfilled its own part of the bargain. Although we are unhappy that ASUU went on strike without fulfilling due process and giving us good notice, we realised that we promised something and did not fulfil it”

–Mallam Adamu Adamu, Minister of Education, August 15, 2017.

 

The two main contending issues that ASUU insists must be implemented before it calls off the strike are (1) implementation of the University Transparency and Accountability Solution (UTAS) in paying salaries for its members instead of the current Integrated Payroll and Personnel Information System (IPPIS) which has been used to systematically reduce the net take-home pay of the academics as a result of inserting some bogus deductions and (2) implementation of the new condition of service or simply, salary increment which was renegotiated by a government-appointed team and ASUU. This renegotiation has been completed in May 2021.

On the first contending issue, the government declared, through the National Information Technology Development Agency (NITDA) that UTAS has failed the integrity test. NITDA had previously expressed its satisfaction with UTAS as a suitable solution for salary payment in our universities when it conducted an integrity test on UTAS in August 2021 in the presence of relevant government agencies as reported by the ASUU president, Prof. Emmanuel Osodeke. On the second contending issue, the government set up another renegotiation team to renegotiate the already concluded renegotiation which was completed in May 2021 on the grounds that some of the proposed allowances were too high and needs to be renegotiated. Consequently, ASUU extended its 1-month warning strike by 8 weeks.

The foregoing contending issues all affect the remuneration of the academics which is currently extremely poor when compared to what their counterparts obtain in other federal government agencies. Imagine, a newly promoted academic to the final rank of a professor earning just about N333,000, i.e. $580.

On the poor remuneration and its attendant negative impacts, I have this to say in my 2020 article on university education.

‘FGN should understand that if lecturers are not paid well enough to take care of their basic responsibilities, they will surely search for alternative means of livelihood which could be by engaging in another job on a part-time or even full-time basis (e.g. business, consultancy, running a firm, farming, etc.). These jobs would take their time so much that they cannot give their best to their primary assignment. I am not against lecturers taking part-time jobs like consultancy or farming. However, you find that in the long term, these part-time jobs systematically and unofficially replace their primary jobs. ‘Self-preservation is the first law of nature’, man would do anything to survive, whether legal or illegal. The terms ‘legal’ or ‘illegal’ have now become relative terms in Nigeria and are purely subject to one’s interpretation and perspective because of the harsh conditions that people find themselves in. Who will ultimately be at the receiving end? The poor students – our leaders of tomorrow. It is not uncommon to hear of full-time lecturers who come to the university only once a week, or once in a month because they are busy attending to their side businesses or jobs elsewhere. This will only worsen the university education system further. The Government can reverse this unfortunate trend if it wishes. No wonder, studying abroad is now more rampant than at any time in the past. About 13 thousand Nigerians are currently studying in America alone. We have many Nigerians studying in Malaysia, the UK, China, Saudi Arabia, India, Ghana, and even Niger Republic. Some of them would engage in other untoward and corrupt practices such as extorting money from students to pass them in their courses, diverting research funds for personal use i.e., if they have access to one, etc. Local and international brain drain. Those who can get jobs at other lucrative MDAs or private firms would resign from their university jobs and go for a greener pasture. Others who have internationally recognized qualifications would get jobs abroad and leave the country for good or for only God knows when. Universities have now become ‘transit camps’, where you temporarily start before you can get a better job. I am not saying that lecturers should earn the highest salary in the land, no! All I’m saying is that lecturers should earn a decent salary just enough to keep them on the job and enable them to give their best. Nobody would go as far as obtaining a PhD only for him to remain a pauper. You have many PhDs that cannot afford to buy a car. Many lecturers cannot pay their rent without doing an annual ‘contribution’. They become more affected when their salaries are stopped by the Government whenever they are on strike to press home their demands. The Government would not honor an agreement she had entered into with the union for reasons best known to her, yet, she would starve the innocent souls by cutting off their meager livelihoods for months. This, to say the least, is the highest level of injustice. No country can survive if she stands on the pillars of injustice.’

Incessant ASUU strikes and privatization of universities

Some people are of the opinion that ASUU strike has failed to achieve any meaningful outcome, hence, ASUU should change its tactics, or better still, accept the privatization of universities as the only lasting solution to their demands.

One of the best outcomes of ASUU struggles is the creation of TETFUND. On TETFUND, I have this to say.

‘TETFund (Tertiary Education Trust Fund) scholarship for academic staff was introduced in 2008. By 2010, it had spread to most institutions. This helped increase the number of academic staff who obtained PhDs abroad (mostly in Malaysia) or did bench-work in other countries such as South Africa or the USA. Now, foreign-trained PhDs have flooded our universities and some polytechnics & FCEs.’

This is in addition to countless infrastructural projects undertaken by TETFUND which resulted in addressing the infrastructural deficit in our tertiary institutions. TETFUND thrives on just 2 % education tax paid from the assessable profit of companies registered in Nigeria.

If the government understands any other language apart from the strike, then ASUU would not have been embarking on strikes whenever it wants to press home its demands. People should also remember that strike is always the last straw when all negotiations hit a dead end. Academics suffer more during the strike because their salaries which may be their only source of income are usually stopped by the government. Can you imagine that ASUU has to always go on strike before its members can be paid their arrears of Earned Academic Allowance (EAA)? EAA is always paid in arrears after it has accumulated for several years because the government did not find it suitable to include the allowance in the annual budget of the universities which would have paved the way for paying the allowance as and when due without the need to embark on any strike before it is paid. Much as I hate strikes, to tell you the truth, I have a phobia for ASUU strikes, but I cannot blame ASUU for these incessant strikes. I can assure you that ASUU will continue to embark on strikes for the welfare of its members, for the infrastructural decay on our campuses, and by extension for the brighter future of the teeming Nigerian students until that day when Nigeria will be blessed with a government that will accord university education the much-needed attention it deserves.

Another school of thought argues that the government does not possess the financial wherewithal to address ASUU demands and that the only viable solution is the privatization of all universities as obtains in most developed nations such as North America and Europe. To me, this is tantamount to comparing apples with mangoes instead of comparing apples with apples. Rather than trying to force privatization on Nigerian universities by looking at the US or Europe, I think it is better if we try to copy from some of the developing nations like South Africa, Ghana, or Saudi Arabia.

For the sake of discussion, let us assume that the government does have enough funds to efficiently run the current universities even though it keeps on creating new ones every now and then – how interesting and convenient to hide under paucity of funds when it comes to effective maintenance of the current universities – is privatization the only solution? I intend to provide an alternative to privatization vis-à-vis the subsidy removal palliatives that the government intends to provide to the poor masses, because in my view, Nigeria is not yet ripe for privatization of her universities.

Firstly, subsidy removal is only a matter of when is it going to be completely removed not a matter of whether the government will completely remove it. Even Saudi Arabia, the largest exporter of crude oil in the world has removed the petrol subsidy. Petrol sells at SR2.18 (N329) per liter in Saudi Arabia and the price undergoes a monthly review. Yet, citizens and residents who work in the government sector enjoy free education in public schools at all levels and free healthcare services at all government hospitals even before the subsidy removal. The dollar to riyal exchange rate has been stable for time immemorial. Can we also enjoy these goodies in Nigeria using the money that would accrue from the subsidy removal rather than giving N5,000 stipend monthly to about 40 million poor masses as indicated by the Finance Minister?

Based on the current price of petrol and Nigeria’s daily consumption, the monthly subsidy stands at around N300 billion. I have the following proposal on how to spend the money that would accrue from subsidy removal instead of giving 40 million poor Nigerians N5,000 per month. Over 40 % of Nigerians live below the poverty line. Hence, there are more than 80 million poor Nigerians, not just 40 million. Hence, there is a need for an all-inclusive solution that will go a long way to cushion the effects of subsidy removal on all Nigerians not just 20 % of the total population.

• Create a new agency that will receive N200 billion monthly from the NNPC instead of giving out this money to just 40 million poor Nigerians N5,000 per month.
• Use the money to declare education free for all at all levels (primary, secondary and tertiary) and improve the standard of education at all levels to such an extent that private schools will no longer be appealing to the masses as they used to be in the 70s and 60s.
• Use the money to declare free healthcare for all and improve the standard and quality of our healthcare delivery system to such an extent that medical tourism and private hospitals will no longer be appealing at all.
• Current petrol subsidy engulfs about N300 billion and counting not N200 billion, hence, the government can still save over N100 billion monthly that can be dedicated to areas such as improving the power supply, boosting local production and incentives, providing and maintaining infrastructure, and stabilizing the dollar exchange rate. Stabilizing the dollar exchange rate will in no small measure curb inflation and attract foreign investments into the country.

If you wonder whether N200 billion monthly could provide free and standard education and healthcare, then, be informed that TETFUND got only about N221 billion throughout 2019, as reported in its annual report. It received a total of N251 billion in September 2020 and was projected to receive a total of about N300 billion at the end of 2020. It means that for all the good works undertaken by TETFUND, its annual income is just slightly above N200 billion which in this case will be the monthly income to be used for the provision of free education and healthcare. With this proposal, the poor masses will suffer at the beginning of subsidy removal due to inflation in essential commodities and transportation but will later smile when they receive free qualitative education and healthcare. Consequently, there will be no need to privatize public universities at all, and subsidy removal would turn out to be a blessing for the masses rather than a curse.

Dr. Salihu Lukman is an assistant professor of Civil Engineering at the University of Hafr Al Batin and writes from Saudi Arabia. salihulukman@yahoo.com