Sanusi: Jonathan halted fuel subsidy removal in 2012 over Boko Haram fears
Muhammadu Sanusi II, Emir of Kano, says former President Goodluck Jonathan suspended the planned removal of petrol subsidy in 2012 due to fears that Boko Haram insurgents could attack protesters.
The nationwide demonstrations against the proposed subsidy removal lasted nearly two weeks and brought economic activities across Nigeria to a halt.
Sanusi, who was the Central Bank of Nigeria (CBN) governor at the time, said the policy was “misunderstood and poorly managed” during the Jonathan administration. He spoke on Tuesday at the Oxford Global Think Tank Leadership Conference themed “Better Leader for a Better Nigeria.”
According to the emir, Nigeria’s petrol subsidy regime operated as a “naked hedge”, in which the federal government guaranteed a fixed pump price regardless of fluctuations in global crude prices, exchange rates, or interest rates.
He explained that the arrangement forced the government to borrow large sums not only to fund the subsidy but also to service the loans taken to sustain it.
“If you look at the template, all of those amounts were being absorbed. The federal government was saying I have an unlimited pocket,” Sanusi said.
“So we moved from a point where we were using revenues to pay subsidies, to where we had to borrow money to pay subsidies, to where we had to borrow money to pay interest on the borrowed money. We had become bankrupt.
Anyone who takes a naked hedge ends up being bankrupted, especially with a commodity where you don’t control the price.”
Sanusi added that Nigeria’s current economic hardship could have been mitigated if the Jonathan administration had gone ahead with the subsidy removal in 2011.
“If Nigerians had allowed the Jonathan government to remove the subsidy in 2011, there would have been pain,” he said.
“But that pain would have been a very, very tiny fraction of what we are facing today. This is the cost of today.”
He said the CBN had projected at the time that removing the subsidy would raise inflation from 11 percent to 13 percent — a temporary increase compared to today’s levels.
Sanusi noted that Jonathan’s decision to suspend the removal was primarily influenced by security concerns.
“And it was like, if one day one of these suicide bombers goes to these Nigerians and explodes the bomb, and you have 200 corpses, it will no longer be about subsidy,” he said.
“So I’ve got to give President Jonathan the credit. He was determined to do it. The only reason the government compromised and did 50 percent, not 100 percent, was Boko Haram.
If one suicide bomber had attacked protesters in Lagos, Kano, or Kaduna, and 200 people died, it would have gone beyond subsidy.”
The emir also took a swipe at Nigeria’s political elite, accusing many educated leaders of abandoning their values for self-interest.
“By the time you become a governor, you should be beyond looking for money. But many live like illiterates despite their education,” he said.
Earlier on September 13, Sanusi had commended President Bola Tinubu’s removal of petrol subsidy, saying it saved Nigeria from bankruptcy.
He maintained that the subsidy regime was unsustainable, as it placed the burden of fluctuating global oil prices, exchange rates, transportation costs, and refining expenses entirely on government coffers.
Muhammadu Sanusi II, Emir of Kano, says former President Goodluck Jonathan suspended the planned removal of petrol subsidy in 2012 due to fears that Boko Haram insurgents could attack protesters.
The nationwide demonstrations against the proposed subsidy removal lasted nearly two weeks and brought economic activities across Nigeria to a halt.
Sanusi, who was the Central Bank of Nigeria (CBN) governor at the time, said the policy was “misunderstood and poorly managed” during the Jonathan administration. He spoke on Tuesday at the Oxford Global Think Tank Leadership Conference themed “Better Leader for a Better Nigeria.”
According to the emir, Nigeria’s petrol subsidy regime operated as a “naked hedge”, in which the federal government guaranteed a fixed pump price regardless of fluctuations in global crude prices, exchange rates, or interest rates.
He explained that the arrangement forced the government to borrow large sums not only to fund the subsidy but also to service the loans taken to sustain it.
“If you look at the template, all of those amounts were being absorbed. The federal government was saying I have an unlimited pocket,” Sanusi said.
“So we moved from a point where we were using revenues to pay subsidies, to where we had to borrow money to pay subsidies, to where we had to borrow money to pay interest on the borrowed money. We had become bankrupt.
Anyone who takes a naked hedge ends up being bankrupted, especially with a commodity where you don’t control the price.”
Sanusi added that Nigeria’s current economic hardship could have been mitigated if the Jonathan administration had gone ahead with the subsidy removal in 2011.
“If Nigerians had allowed the Jonathan government to remove the subsidy in 2011, there would have been pain,” he said.
“But that pain would have been a very, very tiny fraction of what we are facing today. This is the cost of today.”
He said the CBN had projected at the time that removing the subsidy would raise inflation from 11 percent to 13 percent — a temporary increase compared to today’s levels.
Sanusi noted that Jonathan’s decision to suspend the removal was primarily influenced by security concerns.
“And it was like, if one day one of these suicide bombers goes to these Nigerians and explodes the bomb, and you have 200 corpses, it will no longer be about subsidy,” he said.
“So I’ve got to give President Jonathan the credit. He was determined to do it. The only reason the government compromised and did 50 percent, not 100 percent, was Boko Haram.
If one suicide bomber had attacked protesters in Lagos, Kano, or Kaduna, and 200 people died, it would have gone beyond subsidy.”
The emir also took a swipe at Nigeria’s political elite, accusing many educated leaders of abandoning their values for self-interest.
“By the time you become a governor, you should be beyond looking for money. But many live like illiterates despite their education,” he said.
Earlier on September 13, Sanusi had commended President Bola Tinubu’s removal of petrol subsidy, saying it saved Nigeria from bankruptcy.
He maintained that the subsidy regime was unsustainable, as it placed the burden of fluctuating global oil prices, exchange rates, transportation costs, and refining expenses entirely on government coffers.