A national leader of the ruling All Progressive Congress, Bola Tinubu, has defended the decision of President Muhammadu Buhari’s government to discontinue fixing the price of petrol, Premium Times reports.
In a statement on Thursday, Mr. Tinubu, who is a former governor of Lagos State, said the government had to allow the market forces to determine the price of the product because of its long term benefits to the people.
Mr. Tinubu argued that while the government’s policy of fixing prices was done with good intentions, it became obvious that it had been overtaken by corruption.
“While short-term exigencies may at times call for government action to stabilize markets and prices, government’s long-term determination of such economic prices, although initiated with the finest intentions, often contorts into something ugly and callous. It tends to transmute into corruption, waste and distorted pricing signals that cost the economy more than they benefit the people,” Mr Tinubu said.
He said though the government had yielded to the call to allow the forces of demand and supply to determine the price of petrol, it had no intention to completely hands off the process as it intends to keep a close watch on how prices are determined to prevent unjust enrichment and collusion to hike prices unnecessarily.
“It will simply change from its emphasis on maintaining a subsidized price to ensuring that the market remains free and devoid of collusion so that sufficient supply is available at a defensible and affordable albeit higher than subsidy price. Government must still monitor the market to ensure against unjust enrichment that comes from attempts at price fixing,” he said.
He said many people are against the removal of subsidy because it has been on for a long time and people are already used to it. He however said the policy had to go because it no longer served the people as its intended benefits had been hijacked by profiteers.
“The decision to end the subsidy was hard but it was also inevitable. It had distorted into a system where wrongdoers benefited at the expense of the innocent. The bogus supplier was paid for supplying nothing while you sweated in long lines for fuel that was never there. The smuggler secreted fuel across the border while our economy crossed the border into fuel scarcity.”
He added that the subsidy regime also prevented investment and growth in the sector. As most investors, instead of putting funds in the construction of refineries rather settled for the importation of fuel due to the uncertainty that pervaded the subsidy regime.
“As the price stayed fixed at a low level, investors were apprehensive about fixing existing or building new refineries. Our petrochemical industry remained unfertilized because potential investors could not decipher how they could make a decent return under such a pricing regime. Because of these imbalances, we were forced to export hard currency and many jobs to purchase fuel and other products abroad.
“While the price of fuel was cheap in paper, these were the hidden costs that made the subsidy regime an expensive and heavy yoke the nation could ill continue. With dwindling revenue from oil due to the slump in global oil prices and a dwindling forex reserve, the country could no longer live in denial.”
Mr. Tinubu said the decision to remove subsidy now should not be confused to the failed attempt to removed subsidy by the immediate past administration of Goodluck Jonathan.
He claimed that unlike the Jonathan administration whose proposed palliative measure, SURE-P, turned to be a “monumental fraud”, the Buhari government has taken measures to cushion the adverse effects of the decision on the poor.
“However, this decision was not to be a step toward conservative austerity as practiced by the former government. That government simply wanted to end the program that they may prove obedient to neoliberal economic doctrines. They offered no programs of valid compensation to the people. Instead, they instigated a policy of monumental fraud known as Sure-P. However, the only thing sure about it was that its architects would siphon the public’s funds to fatten their own wallets. They wanted to save money (for themselves) yet expend the people for no good reason at all.”
“Thus, President Buhari followed through with a 500 billon fund to support a social safety program and empower the poor and needy. Five million School children will be fed for 200 days. Other plans of funding social infrastructure, education, transportation, health and other critical areas needing attention. What the President did is about the future of our country and that of the next generation.”
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