This was written a year ago when the fuel subsidy debate threw up a comparison with Libya’s subsidies for their citizens.
I see a lot of welfarist arguments on FB that honestly do not stack up against the picture painted by available data. For example folks are speaking about the fact that Libya has cheap petrol for her citizens. This is a country with a population of just over six million people, with five domestic refineries producing refined products with an output twice their local consumption which makes them a net exporter of refined products for close to twenty years now.
Libya also has refinery and retail operations in Italy, Switzerland and Germany. Even as much of their refining operations have been hit by the war and its aftermath, they are still planning to build two new refineries within Libya and another in Egypt.
How do you expect them to sell refined products for anything close to what Nigeria, a net importer with hardly a 30 day run in its refineries in recent time, sells for? How do you expect Nigeria to match Libya with subsidies for consumption of a product it does not make and that consumes a large chunk of her lean foreign exchange? We should only be subsidizing anything that encourages local production and creates employment. Why subsidize what only benefits the economies of the producing countries?
We should focus on the government’s plans to create incentive for local refining and associated industries, provide transportation infrastructure that reduces the pull on petrol, ensure the budgetary provision for social welfare gets to its target, strengthen its oversight functions on the industry and beam their diversification drive on industries rather than just raw materials and minerals export.
Notice that I did not speak of oil? Petrol is not oil. We are not a petrol producing nation and we wont be that in another two years at least and the right product pricing framework is one of the things that’ll get us there.