The decision of the Federal Government to fully deregulate the country’s downstream petroleum sector has encountered serious opposition because government is putting the cart before the horse.
The organized labour as well as many other Nigeria individuals and groups have over the years, been kicking against the deregulation policy which they interpret as another name for fuel price hike, which they insist, would, given the circumstances of most citizens, amount to something close to a death sentence.
Government intends to fully remove the money it claims to be paying to subsidize the price of petroleum products so that market forces can dictate the price of the products, a situation which will result to an inevitable hike in the prices of the products.
The claim of government is that, as happened in the telecommunications sector, once private sector operators are given a relatively free hand, the sector would become competitive, efficiency would be introduced, products would be available at all times and, in the long run, prices would crash.
The worry, however, is that in the short run, Nigerians would be subjected to the untold hardship that will come as a result of government not having done what it should do to create the environment that is necessary for the policy to work without putting the people through needless pain.
The contention of the opposition is, for instance, that what government calls subsidy is the price that it has been paying for the inefficiency, indolence and corruption in the sector, which should not be passed on to the populace.
The fact that government is not refining enough products in the country has led to mass importation of these products and the cost of freighting, ports charges and other handling expenses which would have been needless are now being passed onto consumers.
Nigeria has a combined refining capacity of 445,000 barrels per day and consumes about 350,000 barrels or two million litres of fuel per day. This means that the Nigerian National Petroleum Corporation (NNPC) would have been in a position to satisfy local demand and have excess products to export.
But sadly, the NNPC is not only importing petroleum products but also keeping the staff of the failed refineries whose salaries and allowances are built into the cost of the imported products. It is this situation of an inefficient system, brought about, largely, by corruption in high places, that hapless Nigerians are being asked to pay for.
This should not be so. If government must deregulate, therefore, it must first find an answer for that anomaly, which should include getting the refineries to work by tackling the corruption in the system or privatizing the refineries; by building new ones or licensing private operators and giving them incentives to start operation, and by stopping importation.
Besides, it would be difficult to support increase in the price of petroleum products against the backdrop of the current economic meltdown that is hitting the populace hard. Salaries have been eroded, many have lost jobs while the population of the unemployed has ballooned.
These same embattled people are, further held hostage by lack of public power supply, bad roads, mass poverty, illiteracy, declining industrial capacity, high inventory in the manufacturing sector and diseases, when the health care sector is literally comatose. It would amount to an over kill, or to adding salt to injury, if the prices of petroleum products are increased now when these debilitating conditions have not been addressed.
It must be the increased intensity of the opposition to this deregulation policy that caused government to shift the widely speculated date for the commencement of the implementation of the policy from November 1 this year to January 2010. It is clear that Nigerians are ready to resist the implementation of the policy, notwithstanding the advertised advantages.
What government must first do, therefore, is to clean out the Augean stable of the NNPC and the refineries to make them efficient; encourage private refining of products in the country, and redress the lamentable state of infrastructure, especially public power supply and the road and rail networks. Also, the education, health and housing sectors must be turned around, while the industrial sector must be revived to provide jobs for the millions that are not gainfully employed.
Government must equally dialogue with the organized labour towards arriving at a more realistic minimum wage which should be indexed to accommodate inflation.
The National Assembly must, in addition, accelerate the process of the passage of the Petroleum Industry Bill (PIB) which seeks to, among other things, unbundle the NNPC.
When government has done all that it should to make the environment conducive for full deregulation, it should embark on a more aggressive public enlightenment campaign to explain better to Nigerians why the policy is necessary.