Tuesday, 20 November 2012

Article: Mr. President Got It Wrong On Fuel Subsidy Removal

Fuel Subsidy Removal Protesters In Nigeria

By Nelson Ekujumi,

Just last week while receiving participants of the senior executive course 34 of the National Institute for Policy and Strategic Studies (NIPSS), President Goodluck Jonathan again just like his predecessors made a recourse to their familiar terrain of lies of cover up of corruption in the oil industry by remarking that the total removal of fuel subsidy was the only guarantee to encourage private sector investment in the country’s refinery business as an end to importation of refined petrol.

In the course of the interaction, Mr. President even made allusion to the fact that unlike Nigeria which has four dysfunctional state owned refineries operating below 30 percent of installed capacity, Canada has 16 functional privately owned refineries operating at installed capacity. Again, Mr. President’s analysis is lazy and illogical because it is universally acknowledged and justified locally by our people who have a saying that “Ohun to ba jora laa fin wee ara won” which literally means that “we only make comparison of things and events that have similarities”. The basis of comparing Nigeria to Canada does not exist in any ramification because apart from the fact that they are poles apart in the Human Development Index (HDI), Canada is neither an OPEC member nor an oil producing country like Nigeria . On the other hand, Nigeria can only be compared to countries like Somalia , Afghanistan , etc in terms of failed statehood or in terms of its being an oil producing country with other member states in OPEC.

The issue of state ownership of functional fuel refineries in all OPEC member countries of which Nigeria is a member is not in doubt and we will use this opportunity to avail Mr. President and his economic team this fact. Algeria, for instance is the World 15th largest producer of crude oil (2,125,000bpd) with 5 state owned refineries, maintains petrol pump price at US$0.41 (N61); Libya as at early 2011, (before Muammar al-Qaddafi death), the World 17th largest producer of crude oil (1,79millionbpd), with 5 functional refineries maintains petrol pump price at US$0.17 (N25); Iraq, the World 13th largest producer of crude oil (2.4millionbpd), with 11 functional refineries, maintains petrol pump prices at US$0.38 (N56); Iran, the World 4th largest producer of crude oil (4.2millionbpd), with 9 functional refineries and having the World 10th largest refinery (Abadan refinery, refining 450,000bpd), maintains petrol pump price at US$0.65 (N96); Kuwait, the World 10th largest producer of crude oil (2,49millionbpd) with 3 functional refineries subsidizes petrol at US$0.22 (N33); Qatar, the World 20th largest producer of crude oil (1.2millionbpd), with 2 functional refineries maintains petrol pump price at US$0.22 (N33); Saudi Arabia, the World 2nd largest producer of crude oil (8.8millionbpd), with 9 functional refineries and having the World 5th largest refinery (Ras Tanura refinery, refining 550,000bpd), subsidizes petrol for its citizens at US$0.16 (N24); the UAE, the World 8th largest producer of crude oil (2.8millionbpd), with 4 functional refineries maintains petrol pump prices at US$0.48 (N71); Ecuador, the World 30th largest producer of crude oil (485,700bpd), maintains petrol pump price at US$0.44 (N65); and Venezuela, the World’s 11th largest producer of crude oil (2.47millionbpd), with 12 functional refineries, and owns the World 2nd largest refinery (Paraguana refinery, refining 940,000bpd), maintains petrol pump prices at US$0.02 (N3). From the above analysis, one can see that if we want to make a logical and common sensical comparison on the functionality or otherwise of state owned refineries, our best bet would be with our OPEC colleagues with whom we have something in common. So the critical question to ask is, why are state owned refineries functioning optimally in other OPEC member countries except in Nigeria ? The answer which we all know and are sure Mr. President knows too but is trying pull wool over our eyes is the fact that the non functionality of our state owned refineries is due to corruption and not ownership, pronto!

Again, Mr. President stood logic on its head when he made an analogy of the oil situation in Nigeria to one’s daughter who has a boil on her face, that it’s either you allow it to remain and deface the girl or you make her visit the surgeon for operation at great pain, cost and inconvenience, the end result of which will be a beautiful face. Mr. President as has become his trademark and that of his government got it wrong again. The issue is that when one has a seeming problem, you first of all examine the cause of the problem with a view to proffering lasting and not cosmetic solution. My answer to Mr. President’s analogy is that, it is only the medical doctor who can examine the patient and prescribe the appropriate treatment and not the father of the girl who is naturally swayed by fatherly emotion to assume that if there is a lump on his daughter’s face, then it’s a boil, what if its just pimples? On the other hand, let’s even assume it’s a boil, won’t it be better and economical if it’s treated through administration of antibiotics and other non surgical means rather than the pains and scars of a surgery?

We still remember vividly well that this same old worn out song of the necessity of removal of fuel subsidy which has been over played by successive governments was also publicly rehearsed by the Goodluck Jonathan led government in 2011 with same ridiculous, insensitive, sensibilities annoying and illogical reasons like, a cabal is benefiting, fuel smuggling out of Nigeria is rife because of its low cost, appropriate pricing, deregulation, the need to provide basic infrastructures with money saved from subsidy, etc.

While the lies propaganda machinery were being corruptly oiled by the government last year at the expense of its constitutional responsibility to citizens welfare, patriotic Nigerians and groups came out variously to puncture the lies by analyzing that there was nothing like fuel subsidy but rather that it was corrupt payments (bazaar) being gifted to government officials and their cronies as a result of the mismanagement of the oil industry and even went further to reel out statistics of the cost of locally refining crude oil to petrol plus other sundry expenses which was put at N39.50k per litre as against the exploitative price then of N65 per litre at which it was being sold publicly at the petrol stations. It was also pointed out that the cost of  fuel per litre in Nigeria was the costliest compared to what obtains in other OPEC member countries. It was further exposed that Nigeria apart from being the world’s sixth largest producer of oil, was the only OPEC member country that does not have an accurate data of its oil production since its based on assumption because of corruption and also that it’s the only OPEC member country that exports crude and imports refined petrol for local consumption with the attendant economic loss of other by-products of crude oil to its economy. Just recently, even President Goodluck Jonathan publicly admitted that Nigeria was the only oil producing country in the world that is grappling with the issue of oil theft. With this rare public admission of government failure and irresponsibility, one had hoped and wished that if this government was indeed serious and patriotic, that it would deploy all its energy to combating this national embarrassment and scourge whose cost to the economy was colossal rather than trying to inflict further economic pain on the people through this fraud called fuel subsidy removal.

While Nigerians and groups were calling for debates and dialogue on the issue because we are in a democracy and also due to its socio economic implications, the Jonathan led administration pretended and went ahead to organize jamboree talk sessions with its contractors and sycophants to convey the picture of citizen’s acceptance of it’s illogical, criminal, undemocratic, irresponsible, irresponsive and invitation to anarchy proposed policy. Thus Nigerians were taken aback when they woke up to a new year on January 1st 2012 to a new price regime per litre of fuel at N141 in utter disregard for their wishes and aspirations, the rest as they say is history.

The fall out of the arbitrary increase in the price of fuel per litre on January 1st 2012 and the threat to civil disobedience propelled the House of Representatives to hurriedly convene and pass a resolution calling on the government to return to status quo of N65 which was disregarded as being mere advisory. The House also set up a committee to examine the fuel subsidy regime, whose public sitting revealed mind boggling rot in the oil sector and culminated in the committee’s final report revealing a theft of N1.7 trn of the subsidy funds and thus corroborating the long held view of the fuel subsidy regime as nothing but corruption at its peak. Yet, this was the same government that was busy churning out lies and falsehood to justify its anti people policy of removal of fuel subsidy, whereas the entire country was calling for an audit of the oil industry to check for anomalies which the people were convinced was the bedrock of the industry. The consequence of the report and public outcry forced the government to against its wish adopt it and arraign some alledge beneficiaries of the stolen subsidy funds in court of which we are all still waiting and watching to see if we would not be treated again to what late Afro beat legend Fela Anikulapo Kuti called “government magic” in one of his songs.

The latest call for total removal of fuel subsidy by Mr. President is an escapist admission of failure and one is shocked and surprised that it is coming at a time when the present government has submitted a 2013 budget proposal to the National Assembly in which it has outlined an expenditure of N251.2 billion for the repairs of the four comatose refineries. The question to ask is, doesn’t this policy somersault typify inconsistency, conflict of interest and confusion for government to budget public money for Turn Around Maintenance (TAM) and at the same time be canvassing private ownership of refineries? Also, if in the last thirteen years in the life of the civilian administration in this country in which she has earned over $500 billion dollars from oil export, the Nigerian authorities are unable to make our refineries functional in terms of rehabilitating the old ones and building new ones when it cost between $14 – 19 billions dollars and about four years to construct a new one bearing in mind the recurring social anomie occasioned by this hike in fuel price per litre sustained by fuel subsidy lies and the failed promise of government to build new refineries ever since, then they should quit and allow focused individuals and groups who are indoctrinated in the ethos of democracy and true federalism take over and do the right thing. Also, we want to admonish Mr. President and his team to avail themselves copies of the Venezuelan ambassador to Nigeria , Enerique Fernando Arrundell sermon on good governance and prudent management of a country’s oil wealth to then Mrs. Re branding, Dora Akunyili when she was information minister just in November 23, 2009 to be precise.

The way out of the social anomie consequence of the never ending hike in the price of fuel per litre by the federal government under the guise of fuel subsidy removal can be found in our input into the making of a people’s constitution for the federal republic of Nigeria whereby the federal government is enjoined in the spirit of true federalism to hands off the management of the oil industry just as in other aspects of our lives like power, roads, etc because its an aberration and also due to its colossal failure that has made us a laughing stock in the comity of civilized and serious people. The federal government of Nigeria has repeatedly constituted itself into a big embarrassment to the sensibilities of the good people of Nigeria in usurping other state’s institutions responsibilities in a federation and thus should be barred from delving into areas in which she doesn’t have the capacity or the capability. Part of our recommendation to the constitutional conference which we are advocating for on the way out of our socio-economic crisis and this fuel subsidy removal issue is that states should be constitutionally empowered to either on their own or jointly set up refineries to locally refine the crude oil that the Almighty God has blessed us with but whose mismanagement by successive federal authorities has turned into a curse because of its source of friction between the government and the governed.

Any attempt by the present administration to hike the price of fuel per litre now or in the near future under any anti people guise should be jettisoned for the sake of peace and unity of the fragile and fractured Nigerian state lest the January 1st 2012 Occupy Nigeria street protest be a child’s play as we have all learnt our lessons and resolved that Never Again will we the people allow any group of person’s to negotiate our destiny on our behalf and in our absence.

A word is enough for the wise!

 (Ekujumi is the Executive Chairman,

Committee for the Protection of Peoples Mandate (CPPM), and General Secretary, June 12 Coalition of Democratic Formations (J12CODEF)) 

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