Why Oil Subsidy Is Very Popular In Nigeria- John Campbell

A former Ambassador of the United States to Nigeria who is also a notable critic of the Jonathan-led administration, Ambassador John Campbell has said that Oil Subsidy in Nigeria became very popular because it is the only means by which most Nigerians benefit from the country’s petroleum.

Ambassador Campbell, a Ralph Bunche Senior Fellow for Africa Policy Studies, said at the Council on Foreign Relations on Wednesday night that though Nigeria is one of the world’s larger oil producers, it is dependent on importing gasoline and other petroleum products because of a lack of refining capacity.

The former US Envoy said: “I am told that civil organizations and trade unions have contingency plans in place for strikes and demonstrations should the government seek to eliminate the fuel subsidy altogether, as it might be tempted to do in light of the current fiscal shortfall. That puts the government between a rock and a hard place, given its apparent shortage of revenue”

“The Ministry of Finance estimated daily fuel consumption at 19 million liters daily. But, according to the press, NNPC says that actual consumption has been 33 million liters. A way out would be for the National Assembly to increase the appropriation for the fuel subsidy. But President Jonathan and Ngozi Okonjo Iweala, the Minister of Finance, have said that their goal is to eliminate the subsidy altogether because of its costs and the distortions it causes in the market”

It would be recalled that the Minister of Finance, Dr Ngozi Okonjo-Iweala, had on Wednesday made it known that more than half of the amount budgeted for 2012 subsidy has been expended to offset 2011 subsidy arrears.

Speaking in a statement, Dr. Iweala said: “Nigeria budgeted N888 billion for fuel subsidies this year but N451 billion has been spent on back payments for 2011, this is more than double what was to be paid as arrears. This is clearly not sustainable and the ministry has a responsibility to ensure that the lapses that may have led to this unhealthy situation are not repeated.”