Sunday, 13 January 2013

Article: The Real But Hidden Drivers Of Fuel Subsidy Removal Policy


Protest Against Fuel Subsidy Removal In Nigeria In January 2012

By Jaye Gaskia

The more we have challenged this regime and confronted it with counter arguments to the reasons it is proffering for the urgency with which it is determined to remove fuel subsidy; the more new facts have emerged based on logical and rational, as opposed to vodoo, analytical interpretation of official data from government and global Oil industry sources!

And from all that is emerging and that we know, it is now becoming quite glaringly clear that this regime is indeed beholden to, and unable to contain a parallel power structure, which it has sensationally referred to as the cabal or cartel. The ingrained culture of official corruption combined with the total lack of patriotism among public officials, has been and continues to be a significant factor in the apparent powerlessness of a ‘legitimate' government, when confronted by an 'illegitimate' counter power, organised in the cabal and cartel!

Let us take just one significant case study to explain this insincerity and subterfuge on the part of government; The question of domestic refining capacity, and the issue as to whether we ought to be importing refined petroleum products in the first place at all!

The regime is posturing as if we do not have installed domestic capacity to refine crude oil; this is absolutely a lie. We now know that from 1 barrel of crude oil, we can get 168 litres of refined fuel, out of which 73.05 litres is PMS [petrol]; so with installed capacity of 445,000 barrels of crude per day in the existing 4 refineries, we can conveniently refine 74.8 million liters of refined fuel per day, out of which, we can get 32.5 million liters of PMS per day. And at the 40 million liters per day imported and paid for in 2012, itself still a bloated figure, we would only need to import about 7.5 million liters per day of PMS until the 3 new GreenField refineries come on board! So why is the regime not willing and able to pursue this cause of action? It must be because it not only aid and abets the criminality in the sector, it provides protection for the criminals, and is itself rather a major beneficiary of the corruption and treasury looting [a state crime] that is being perpetrated and perpetuated.

What is interesting about these figures is that if the four refineries were working at 100% capacity or even at 90% installed capacity, we would be able to conveniently meet daily domestic consumption of PMS from domestic refining of crude. This means we will be ale to cut out the unnecessary waste of about 85 Naira added to the 65 Naira per liter cost which arises solely because of the cost of importation. Furthermore, we now also know that the effective cost of PMS per liter if we were to include domestic cost of production [refining] plus cost of distribution, plus profit margin, comes upto only 35 Naira per liter at most. This in effect means that we should in fact be paying far less per litre for petrol than we are currently paying.

Now the government claims that they have improved refining capacity in the refineries from the below 30% they met it two years ago to between 50% and 60% capacity as of today. The government have also said that it will get the refineries upto 90% capacity utilisation by the end of 2012. The implication of the foregoing is that if we already produce at 50% of installed capacity, then we should not be importing more than 18 million liters of PMS per day, and therefore the subsidy bill should have been half of what is currently claimed. Second, it has also been confirmed that a proper audit will confirm that we infact consume far less than 32 million liters of PMS per day, if we remove the waste that goes into smuggling across the borders and the sharp practices including round tripping which involves the oil import cartel and officials of government. Third, it also means that by the end of 2012 we can actual put a definitive stop to fuel importation, because we would have become self sufficient. So if we are to agree with the CBN governor that we can afford to continue to cover the importation costs [called subsidy] from public [that is federal funds] over the next four years, and that we would only run into severe crisis by 2015; then we can safely conclude that this subsidy can be continued for just one more year, by the end of which we wouyld have achieved sel sufficiency in domestic refining.

It is important that we have based all our analysis on what is existing [the four refineries], and have not included the implications of having additional 3 new refineries with combine capacity of 400,000 barrels of crude per day, and which the government have said can be completed in 2 years!

It therefore means that by the beginning of 2014, we would have acquired enough capacity to not only meet domestic needs but to also service the sub region with attendant additional export earnings as opposed to the present export spendings.

So why is the government presenting the facts as if we would continue to require substantial importation of refined fuel products over the next several years? Why is government insistent on continued importation, and therefore continued servicing of the cabal and cartel? Let us not forget that the removal of the subsidy those mean that importation will be stopped, or that the oil marketers/importers will not continue to import; infact it simply means that the government wants us to individually as citizens pay the importers for this costs, such that it is no longer covered from the public purse.

From the above, it is even more pertinent that will renew and strengthen our opposition to the proposed policy of hiking fuel prices, and insist that the Federal government of Nigeria ensures the 4 existing refineries are working at more than 90% capacity by the end of 2012, and that the 3 new refineries are completed and working at full capacity by the end of 2013. It can only do this if it confronts the cabal, tackle criminality in the sector and eliminate corruption from the sector. It will only be able to do this if we do not relent in our resistance and if we continue to increase the pressure on the regime through active mass resistance and direct action.

Return To The Streets, Retake Our Country, Reclaim Our Humanity, Occupy Nigeria For Social Transformation!

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