When I said Atiku’s promise to bring back the subsidy was a scam, some of you thought I was overreacting. Just watch his party leader “explain” the unexplainable. The simple question is: what are the numbers? The answer: “We are still consulting.” Can you imagine that? You made an announcement without knowing what you’re talking about.
Let me explain this once more. The high price of petrol is more a function of the exchange rate than of the cost of production. A true subsidy only attacks the cost of production. But if the exchange rate dips further, which loss of revenue from the subsidy can trigger, a huge gap will result. The subsidy required will balloon beyond what is sustainable, and a new wave of price increases, disguised as “subsidy,” will follow.
The present high price of petrol is not just because the subsidy was removed. It is because of the extremely low value of the naira. Tinubu devalued the naira by over 300%, and even the IMF agrees that’s too much. Yet even at that rate, Tinubu has still had to borrow at least $5.8 billion just to keep it stable there.
What’s actually happening is this: Tinubu announced a float of the naira but lacks the discipline, honesty, and resource-management skill to control public expenditure and drive production. The result is constant pressure on the naira.
The way forward is to find someone who can competently and honestly manage our finances and resources, to keep costs down and drive production. That will give the naira real value — it can rise to as high as ₦1,000/$1 without any borrowing. Once the exchange rate stabilizes at a level comfortable for production, we can then talk about a true subsidy on petrol. And that subsidy should not mean handing Dangote crude at a concessionary price — tax and tariff waivers are the better route.
Published by Chuks Nwachuku
