The last six months have been filled with raging debate over proposed removal of fuel subsidy in Nigeria. The cantankerous issue is not new, but has never been dealt with decisively, thus coming and going like Soyinka’s Abiku and pitching governments against Nigerians who are ever ready to resist what is considered as government strategy for impoverishing and incapacitating them. The Jonathan administration has put together an economic team whose mandate includes ensuring fuel subsidy is extinct in Nigeria. And declared that there is no going back on the January 2012 planned takeoff date when all petroleum products including kerosene, diesel and petrol shall be determined by market forces. The meaning of this is not clear for many Nigerians. But government is not clear either.
However, Nigerians appear set to stand up against President Goodluck Jonathan on an issue many consider at the heart of their economic wellbeing. The absence of clarity creates room for interpretations and for some; it means Nigerians should get ready to pay as much as N200 for a litre of petrol which currently sells for N65 based on equalization pricing.
Nigeria is rich in natural resources boasting more than thirty nine different types of solid minerals spread across the East, West, North and South of the country. In addition, it is vastly endowed with oil and gas and currently Africa’s largest producer. The presence of large deposits of natural resources, together with a population of about 150 million people, considered predominantly young and hardworking, creates reason why Nigerians regard their country as rich and, like Venezuela, Iran, Iraq, Russia that are similarly blessed, ought to provide petroleum products that are cheap and accessible. What this means in the reasoning of Nigerians is that they should pay less for petroleum products made from oil which nature has graciously and abundantly blessed them with. And should not have to pay the same price like their neighbours in Benin, Togo or Ghana that are either resource poor or new entrants to the exclusive club of oil rich or oil producer nations. Governments on the other hand have argued consistently that subsidy distorts the market and discourages investment. It is considered as a major leakage bleeding the Nigerian economy of scarce revenues that governments need to survive and provide services.
President Jonathan’s eagerness to confront this stubborn issue is admirable considering that it opens opportunities to put subsidy and fuel supply in Nigeria to rest. But the solution canvassed by the Jonathan administration is both condemnable and dangerous for Nigeria’s democracy. What makes it condemnable?
The downstream sector has remained far too long in the hands of a selfish cartel that has gotten too used to super profit at the expense of Nigeria and Nigerians. When Nigeria deregulated and liberalized the downstream sector, it removed the monopoly rights previously enjoyed by Nigeria’s national petroleum corporation as the sole importer of petroleum products. By opening up the sector for private participation Nigeria governments hoped to promote investment, efficiency and effectiveness necessary to stimulate competition and make petroleum products available and reasonably priced to Nigerians. Instead the deregulation created an oligopoly market where a few politically connected investors emerged to seize and control product supply and price; thus cornering the monopoly rights previously enjoyed by NNPC. Buoyed by political patronage and protection they milk Nigeria through questionable transfer payments in the name of equalization and subsidy payments from federal government. By threatening to remove fuel subsidy President Jonathan, like previous governments, appears to be taking side with the cartel, preferring to take money from impoverished and helpless Nigerians and hand them over to profiteers and looters who are in the first place responsible for the harsh conditions facing the people.
The downstream sector is locked in several shady deals which lock out accountability. Former president Yara’Adua acknowledged this much in his life time saying then that the cartel had become too powerful and out of control. They had seized the sector so securely that government could no longer guarantee uninterrupted supply of kerosene, diesel and petrol (motor spirit) unless importers are appeased. So while the federal government claims to spend billions and trillions to importers it has never been bold enough to publish a breakdown of actual amount paid out and the beneficiaries. Industry experts have also given up alleging that the petroleum equalisation and stabilization funds are locked in opacity that will never allow Nigerians to understand or effectively engage the sector.
But the biggest leakage in Nigerian economy is widespread corruption that bleeds the nation of billions of dollars in the form of bloated contracts, over invoicing, outright theft and disappearance of government properties. Not too long ago Nigerians were confronted with suffocating revelations of mismanagement of public resources including the $16.25 billion independent power project; the more than N20 billion aviation rehabilitation funds; N7 billion community power projects. Several billions voted annually to education, agriculture, health, police, etc simply grow legs and disappear without trace leaving the sectors in sorry state. Even the controversial excess crude account that stood at about $26 billion, at the height of the commodity boom is now totally liquidated. Yet the country struggles to show value for it.