WURU WURU TO THE ANSWER

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WURU WURU TO THE ANSWER

I still remember when we were much younger, that phrase “wuru wuru to the answer”. I can’t really remember who coined it but it describes someone who probably knows an answer to a mathematics question or probably copied the answer to the question but cannot necessarily remember or reproduce the workings and the calculations. He then creates an impression of knowing the answer by creating some bogus calculations in the hope of fooling the Mathematics teacher who more often than not doesn’t end up getting fooled.

Sometimes recently in our election history, 2007 in particular, we remember Dr. Maurice Iwu, who was later christened “Iwuruwuru” because he showed Nigerians an answer i.e. the results of the Presidential election but could not show the workings i.e. the state by state result that summed up to the total. Till date, that Election Result breakdown has not being released into the Public. We should also remember that it is that particular Iwuruwuru that brought in Late President Yaradua who Goodluck deputized and thereby also ushering in the present Goodluck Administration. Yaradua confessed also to the malpractices in the election that brought him into power but that is not even the point for today. Just History.

Fast forward to 2012, Nigerians are now faced with many wuruwuru’s again as a result of the so-called Fuel Subsidy removal. Typical Nigerian maintains that we do not have a Fuel Subsidy in place in Nigeria, what we have is a Fuel Scam. You can find that article here.

Also, people have an opinion that Government shouldn’t remove the Subsidy because we don’t trust you with what you’ll do with it. Some have another opinion that Government should cut the waste in Government and then they can have the moral authority to remove Fuel Subsidy.

So, let’s assume that it is even a Fuel Subsidy, not a Fuel Scam. Let’s assume that the Government is trustworthy and they will do what they say, at least they say they will be more trustworthy now and transparent. Also, let’s assume that the Government has cut waste and in-fact Goodluck and the Senators are not earning a dime. As mathematics teachers, let’s just look at the claims as regards Fuel Subsidy that have been made by our students Mrs. Ngozi Okonjo Iweala, Mr. Sanusi Lamido Sanusi, Mrs. Diezani Allison Maduekwe, and our dear president Dr. Goodluck Ebele Jonathan.

MARKING THE SCRIPT

The SURE document on Page 4 says:

2) The FGN is therefore desirous to remove subsidies on prices of petroleum products because this poses a high financial burden on the government, disproportionately benefits the wealthy, is inefficient and diverts resources away from potential investments in critical infrastructure. 

3) The total projected subsidy reinvestible funds per annum is N1.134 trillion based on average crude oil price of US$90 per barrel, out of this N478.49 billion accrues to Fed Govt, N411 billion to State Govts, N203.3 billion to LGAs, N9.86 billion to the FCT, and N31.37 billion as Transfers to Derivation and Ecology, development of natural resources and stabilization funds.

4) This programme is focused on utilization of Federal Government’s share of the subsidy. Every State and Local Government is expected to design its own programmes utilizing the portion of the subsidy reinvestment funds from the discontinuation of the fuel subsidy will be used for the implementation of the programme and to reduce our borrowing needs.

Wuruwuru 1: How did Government come about the 1.134 trillion re-investible subsidy funds?

A simple calculation shows that if 1.134 trillion is re-investible and N75 is the cost of subsidy per litre, Nigerians are projected to consume 15.12 billion litres of Petrol annually and dividing by 365 days, 41.42 million litres of Petrol per day.

Here is the Problem: Sanusi, Diezani, and others claim that Nigerians should be using averagely 30 million litres per day, that the rest 10 million litres of it is smuggled and a few cabal are getting rich based on that. You claim that removing the subsidy ensures that the smuggling cartel will be stopped. So, if you believe that is true, then why do you base the money to be re-invested on an extra 10 million litres. Is this money now being extracted for another cabal to spend? Typical Nigerian is confused. It seems that someone is just eager to spend down on the money. Those 10 million litres per day accumulates to 274 billion naira at the end of the Year. Typical Nigerian won’t say any more.

Wuruwuru 2: They say that the 1.134 trillion is based on average crude oil price of US$90 per barrel.

Now, Typical Nigerian is confused again. What has the subsidy funds got to do with the price of a barrel of Oil? The Nigerian government, Sanusi and Okonjo in particular has always claimed that Nigeria borrows money to fund the Subsidy and one of the reasons why they want to discontinue subsidies is to reduce our borrowings. Yes, we know Nigeria’s budget is heavily dependent on the price of a barrel of Oil but what has the Subsidy funds got to do with that or are they really connected? More on this later!

Wuruwuru 3: The amount has been shared among the 3 tiers of government i.e. at the Federal, State, and LGA level. The question is how did Government come about the sharing formula when according to the document the States and the Local Government has not designed their programmes for utilizing it? Even the Government’s so-called programmes for utilizing the funds neither contains timelines or specific budgets to each project.

Scrolling to the 18 and 19 of the SURE document even raises more alarm. Not only has the funds been allocated to states in bulk earlier, then we find out that they have been allocated individually to states and their local governments without the Government even asking what is to be done in such states yet. What then are the criteria for allocating the funds? Is it allocated per population of the people living in each state? Is it targeted towards the poor people as insinuated? Is it just a sharing of resources? Let’s see.

The Four Major oil-producing states Rivers, Akwa Ibom, Delta, and Bayelsa tops the chart with 50.75, 50.59, 46.96, 36.14 billion naira allocations each. The states Ekiti, Gombe, Nassarawa, Ebonyi are at the bottom with 9.62, 9.48, 9.46, 9.11 billion naira allocations each.

Typical Nigerian raises an eyebrow on these numbers, but then Typical Nigerian remembers that the Subsidy is supposed to target the masses, so Typical Nigerian goes on a quest to see whether the money goes into the states where the population i.e. the masses are.

Taking a quick trip to the Nigerian Population commission and applying the average annual growth rate of 3.41% for Nigeria, we can estimate the population of Nigeria presently without putting into consideration Urban-Rural and Rural-Urban migration. The 3.41% is the calculated average annual growth rate since Nigeria grew from a population of 140 million to 167 million over 5 years.

What Typical Nigerian finds out next is amazing and mind-boggling. If the money allocated to each state is to be divided equally to the masses and handed out to each individual, if you are in Bayelsa, you will get N17,829, in Akwa Ibom, N10,904, and in Delta, N9,603. But, if you are in Kaduna, N2,212, in Kano, N2,050, and in Lagos, N1,591.

It is left to you, the Reader to answer whether this money actually reaches the masses proportionately or not but my advice to you will be that over the next 3 years of the non-subsidy regime it will be of benefit to you to live in Bayelsa or Akwa Ibom than live in Lagos.

If you are still wondering where you should live in the next 3 years, this final analysis will help you a lot.

From the breakdown of how much Petrol is consumed per state available from the PPPRA website. The record for the month of April 2010 is the most similar public record that one can compare with the Subsidy re-investment calculation because it shows that in that month we had an average consumption of 41,032,299 litres.

So, using the amount of litres consumed per state and multiplying it by N75 which is the amount paid on unsubsidized petrol, we find out that Lagos might be a no-no place to stay or do business. Infact, the Lagos state Government might have to devise a way to start subsidizing fuel for its own people while the Bayelsan State Government will also have to devise innovative means to spend some sweet extra billions on its masses.

With the removal of the subsidy, Lagosian people and businesses will spend N291 billion EXTRA on unsubsidized Petrol while getting an allocation of N17.2 billion. Delta will spend N8.6 billion EXTRA while receiving 46.9 billion. All in all, Lagosians might have to start budgeting on how to find N274 billion extra to spend on Fuel this Year, while Deltans, Bayelsans, and Akwa Ibom people would have to start looking for ways to spend N34 billion of excess cash this year.

This mathematics is enough for a day, we have not finished marking the script, and I am having a headache. There is still more to be dug out, so, please stay tuned. To be continued tomorrow when we dissect the PPPRA and PPMC under Mrs Diezani.

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Appendix

How States Benefit from Fuel Subsidy compared to how much they spent on Unsubsidized Fuel.

STATE	AMT-STATE '000	AMT-LGA '000	TOTAL  '000	POPUL-ATION	PER CAPITA	PMS  '000 Lts	Removed Subsidy (N75)	Difference
ABIA	7,460,062	4,238,037	11,698,100	3,383,829	3,457	252,107	18,908,053	-7,209,954
ADAMAWA	7,093,217	5,453,941	12,547,159	3,780,523	3,319	340,742	25,555,617	-13,008,459
AKWA IBOM	43,406,732	7,192,652	50,599,383	4,640,461	10,904	220,924	16,569,305	34,030,079
ANAMBRA	7,164,697	5,406,502	12,571,199	4,968,425	2,530	199,422	14,956,642	-2,385,442
BAUCHI	8,309,773	6,252,968	14,562,741	5,533,595	2,632	309,589	23,219,140	-8,656,399
BAYELSA	33,839,652	2,300,560	36,140,212	2,027,071	17,829	50,796	3,809,669	32,330,543
BENUE	7,659,631	6,357,999	14,017,630	5,058,584	2,771	135,942	10,195,686	3,821,944
BORNO	8,451,350	7,307,087	15,758,437	4,960,428	3,177	483,327	36,249,488	-20,491,051
CROSS RIVER	7,718,686	4,540,847	12,259,533	3,440,446	3,563	232,637	17,447,745	-5,188,211
DELTA	40,965,477	6,001,812	46,967,289	4,890,669	9,603	114,859	8,614,402	38,352,888
EBONYI	5,880,552	3,235,045	9,115,597	2,588,904	3,521	95,263	7,144,730	1,970,867
EDO	9,432,709	4,544,887	13,977,596	3,845,236	3,635	291,966	21,897,441	-7,919,845
EKITI	5,931,761	3,697,048	9,628,809	2,852,927	3,375	36,841	2,763,052	6,865,757
ENUGU	6,692,450	4,380,299	11,072,749	3,886,230	2,849	153,577	11,518,289	-445,539
GOMBE	6,291,166	3,196,301	9,487,467	2,812,591	3,373	122,397	9,179,805	307,663
IMO	8,729,127	6,342,353	15,071,479	4,670,800	3,227	198,273	14,870,442	201,037
JIGAWA	7,848,087	6,654,100	14,502,186	5,186,262	2,796	137,976	10,348,227	4,153,959
KADUNA	8,944,553	7,136,962	16,081,515	7,270,400	2,212	562,982	42,223,614	-26,142,100
KANO	11,210,304	11,712,751	22,923,055	11,180,353	2,050	727,560	54,566,987	-31,643,933
KATSINA	8,525,403	8,563,273	17,088,675	6,899,454	2,477	288,284	21,621,292	-4,532,617
KEBBI	7,131,001	5,319,282	12,450,282	3,872,797	3,215	308,117	23,108,793	-10,658,511
KOGI	7,113,202	5,513,261	12,626,463	3,941,180	3,204	231,050	17,328,737	-4,702,274
KWARA	6,482,038	4,234,045	10,716,082	2,812,964	3,810	250,266	18,769,933	-8,053,851
LAGOS	10,126,514	7,114,677	17,241,191	10,838,230	1,591	3,881,917	291,143,794	-273,902,603
NASSARAWA	6,073,343	3,388,144	9,461,487	2,223,131	4,256	177,224	13,291,780	-3,830,293
NIGER	8,294,895	6,865,935	15,160,830	4,703,158	3,224	355,866	26,689,953	-11,529,123
OGUN	6,932,554	5,080,656	12,013,211	4,460,992	2,693	526,212	39,465,888	-27,452,677
ONDO	12,554,345	4,689,711	17,244,057	4,115,800	4,190	287,475	21,560,609	-4,316,553
OSUN	6,575,163	6,391,233	12,966,396	4,063,572	3,191	289,745	21,730,907	-8,764,511
OYO	8,283,911	8,172,705	16,456,616	6,637,002	2,480	704,307	52,822,988	-36,366,372
PLATEAU	6,956,828	4,678,164	11,634,992	3,813,323	3,051	241,556	18,116,723	-6,481,731
RIVERS	44,628,273	6,125,835	50,754,108	6,182,502	8,209	900,188	67,514,076	-16,759,969
SOKOTO	7,395,671	5,872,227	13,267,898	4,403,357	3,013	171,876	12,890,690	377,208
TARABA	7,005,146	4,674,398	11,679,544	2,729,059	4,280	63,532	4,764,892	6,914,652
YOBE	6,952,383	4,533,027	11,485,409	2,760,621	4,160	199,106	14,932,928	-3,447,519
ZAMFARA	6,973,520	4,255,704	11,229,225	3,899,355	2,880	125,559	9,416,901	1,812,324
FCT	9,860,000	1,811,053	11,671,053	1,672,350	6,979	1,307,333	98,049,966	-86,378,912