{"id":2890,"date":"2022-09-16T15:47:32","date_gmt":"2022-09-16T15:47:32","guid":{"rendered":"https:\/\/placng.org\/Legist\/?p=2890"},"modified":"2022-09-16T15:47:36","modified_gmt":"2022-09-16T15:47:36","slug":"kenya-axes-fuel-subsidy-as-nigeria-burns-revenue-and-borrows-to-pay-subsidy","status":"publish","type":"post","link":"https:\/\/placng.org\/Legist\/kenya-axes-fuel-subsidy-as-nigeria-burns-revenue-and-borrows-to-pay-subsidy\/","title":{"rendered":"Kenya Axes Fuel Subsidy as Nigeria Burns Revenue and Borrows to Pay Subsidy"},"content":{"rendered":"\n<p>Barely two days after taking the oath of office on Tuesday, 13<sup>th<\/sup> September 2022, Kenya\u2019s new President, William Ruto announced the removal of subsidy on petroleum products. While the subsidy for petrol was removed, partial subsidy was retained for diesel and kerosene. Ruto had described his country as being \u201cin a deep economic hole\u201d and described food and fuel subsidies as \u201ccostly and ineffective\u201d. It is unclear the effect that Kenya\u2019s removal of fuel subsidy will have on its citizens. What is however clear is the apparent show of understanding about the decision. There are no citizens\u2019 protest on the street and the country is bracing up for what could be a harsher impact on the economy. <\/p>\n\n\n\n<p>In Nigeria, the government has failed to take decisive\naction on the subject of fuel subsidy. Indeed, it appears that it continues to\ndig down into the hole. From an official subsidy figure of N4trillion in 2022,\nthe government is again planning a 2023 budget that may be paying more than N6.7\ntrillion in subsidy (for the full year of 2023) representing about 34 % of the\ntotal national budget. Indeed, almost Nigeria\u2019s entire projected revenue for\n2023 is expected to be ploughed back into subsidy. Yet, this may not even be\nsufficient to pay for the subsidy, even as the government anticipates a 2023\nbudget deficit of between N11.3 trillion to N12.31 trillion. It is unclear\nwhere the government intends to find money to fund the deficit with fears\nexisting that some of the borrowed monies to fund the budget deficit will\nfurther go to payment of subsidy. For a lot of Nigeria watchers and citizens,\nthis is mind boggling economics. <\/p>\n\n\n\n<p>Nigeria has spent an incredible amount of money in\nclaims that it is repairing its four major refineries. Last year, it spent\nabout N100 billion claiming that the refineries were being fixed. The\ngovernment also spent billions of naira subsidising, as well as selling subsidised\nforeign exchange to Dangote Refinery that is being built in Lagos ostensibly to\nend fuel imports. The Dangote refinery has been in the build mode for years\nwithout any clear indication about when it intends to come on stream. <\/p>\n\n\n\n<p>Nigeria has not been able to manage its oil wealth.\nSince the beginning of the Russia-Ukraine war, several of the oil producing\ncountries and companies have been able to reap windfall profits with consuming\nnations urging higher production. Unfortunately, Nigeria&nbsp; has seen continued drop in crude oil\nproduction and an inability to meet its production quota. In addition, the\ncountry is losing so much crude oil to theft. The expected privatisation of Nigeria\u2019s\noil behemoth, which resulted in the creation of Nigeria National Petroleum\nCompany\u2019s (NNPC) Limited under the Petroleum Industry Act appears to have\ncomplicated matters. Appointments into the take-off company has been very\nunprofessional with politicians put into its management and leadership. The new\nCompany\u2019s operations can be described at best as opaque. Governments in the\ncountry have not been able to tackle the issue of subsidy for a variety of\nreasons. First, the subsidy regime fosters a culture of corruption and\nthievery, which officials appear unwilling to dismantle. Second, the fear of\nthe political consequences means that the boldness of action needed to be taken\nhas been missing.&nbsp; <\/p>\n\n\n\n<p>In January 2012, President Goodluck Jonathan\u2019s attempt\nto remove petrol subsidy resulted in a nationwide shutdown protest headlined \u2018#OccupyNigeria\u2019\nprotest. The government backed down from the planned increase of the price of\npetrol. However, during campaigns in the 2015 general elections, President Muhammadu\nBuhari criticised the subsidy resume and promised that upon assumption of office,\nthe issue of subsisdy will be resolved once and for all. Nigerians applauded\nthis but have been disappointed to see an even worse subsidy regime under President\nBuhari. Despite the increase in oil price multiple times from the 2012 #OccupyNigeria\nprotest price of N67\/litre to the current price of&nbsp; N175\/litre, the Buhari government\u2019s spend on\nsubsidy has unrestrainedly galloped. Although the Nigerian Labour Congress\n(NLC) and citizens offered feeble resistance to its price increases, the government\nhad gone forward to increase fuel prices. Citizens had hoped that these\nincreases would have helped to end the subsidy regime but this has apparently\nfailed. <\/p>\n\n\n\n<p>The question of retaining petrol subsidy has become\neven more crucial at this time when there are discrepancies observed in the\nquoted quantity of daily petrol consumption. Only a few weeks ago, the Nigeria\nCustoms Service challenged the petrol consumption rate of 60 million litres per\nday&nbsp; given by the NNPC, as against the\nCompany\u2019s release of 98 million litres of petrol into the market on a daily\nbasis. &nbsp;NNPC also claims that its revenue\nis being channeled into the payment of petrol subsidy, as explanation for\nnon-remittance of its revenue into the Federation account since the beginning\nof 2022. <\/p>\n\n\n\n<p>The entire petrol subsidy regime, with figures\nincreasing at an alarming rate and taking up a huge chunk of the national\nbudget appears unsustainable and requires immediate holistic review. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Barely two days after taking the oath of office on Tuesday, 13th September 2022, Kenya\u2019s new President, William Ruto announced the removal of subsidy on petroleum products. While the subsidy for petrol was removed, partial subsidy was retained for diesel and kerosene. Ruto had described his country as being \u201cin a deep economic hole\u201d and [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":2895,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-2890","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts\/2890","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/comments?post=2890"}],"version-history":[{"count":1,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts\/2890\/revisions"}],"predecessor-version":[{"id":2896,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts\/2890\/revisions\/2896"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/media\/2895"}],"wp:attachment":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/media?parent=2890"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/categories?post=2890"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/tags?post=2890"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}