THE FUEL SUBSIDY SAGA IN NIGERIA: A drawback resulting from government inefficiency (The Turnaround)

In the beginning

This is the final part of the series; “THE FUEL SUBSIDY SAGA IN NIGERIA: A drawback resulting from government inefficiency”. So far this work has had 4 parts published on the 4^th and 18^th of April, 25^th of May and 6th of June 2012.

In Part 1, the history of fuel subsidy in Nigeria is discussed. Also, the weeklong strike that kicked off on Monday, 9 January, 2012 was highlighted with the impacts it had on the nation underscored.  

Part 2 stresses the fact that subsidy on a product with a high level of patronage should be encouraged. In addition, Venezuela, Malawi, China and the US served as practical examples on why subsidy on such products should stand.  

Part 3 focuses on the 12 OPEC member nations. The focal point of attention on these countries was having an overview of the effects of their individual local oil prices on the average living standards prevalent in these countries. Secondly, what I call the National Economy Performance of these countries was examined. 

Lastly, Part 4 discusses the excuses that have overtime been put forward by past governments in Nigeria on why subsidy is important. As against this, it was noted that these excuses due to its repetition lost its taste of truthfulness and purity. 

Bringing to history the fuel subsidy brouhaha

The Minister of Finance, Mrs. Okonjo-Iweala once said “The important thing is that we cannot continue on the way we did in the past. It would be plunging our future into crisis.” No questioning the credibility to this statement but paying close attention to the angle to which the statement was made and directed towards, it only fits for a half standing. Scintillatingly, she is right because the government cannot continue to do what she did in the past and the removal of subsidy would be widely celebrated when a 100% refining of our local oil is achieved. 

Corruption thriving in the oil sector is not and should not be a reason for the removal of subsidy from PMS. This is because removing subsidy on fuel due to corruption only leads to a shift in corruption to other areas that the funds meant for subsidy would be spent on. 

Since the government argues that corruption is a reason for the removal of subsidy on petrol, the following questions come to mind;

• Is corruption bigger than the nation and perhaps a nut so difficultly impossible to crack?
• Can’t the so-called cabal ruining the downstream sector and the Nigerian economy as a whole be brought to book?
• With the corruption experience in Nigeria, isn’t it obvious and expected that ‘removing’ subsidy from the oil sector and transferring the money to other sectors of the economy added to the newly established SURE, would lead to a shift in corruption from the oil sector to other areas of transfer as earlier pointed out?

 This predicament Nigeria has found itself is not because she cannot get herself out of it but rather because of the selfishness of her leaders over the years and their desire to keep Nigeria in the glitch she is in due to their selfish interest and the fact that they one way or the other benefit from such quandary.

According to Rose Oko, a member of the House of Representative in Nigeria, in 2002, a total of 18 licenses were issued for the construction of new refineries. But as she rightly noted, 9years after the first set of licenses where issued, none of them has commenced actual refining of petroleum products. 

She further observed that the 1.3trillion spent on subsidy removal yearly should be appropriately diverted in the provision of 2 new refineries. To this respect, this is the most reasonable defense anyone can put forward for the removal of subsidy on petroleum.

Many Nigerians have come up with lots of suggestions on how to put the subsidy on fuel and the importation of refined petroleum for local consumption behind the self-acclaimed giant of Africa.

However, with the following recommendations I will put forward, I hope there would be no need for me or anyone to visit this issue again.

At this juncture, the following are pivotal to be employed by the government in order to have a turnaround in the fuel subsidy brouhaha that has lingered over the years;

1. A no to corruption: The government should endeavour to have an ugly face on corruption, thereby being utterly practical and glaring for all to see that indeed the fight for corruption is not a sitcom. 

No doubt, the primary reason for the dwindling nature of the Nigerian economy with regards to poverty level, per capita income and inflationary rate is due to the geometrically transmission pace of corruption from preceding government to succeeding government. Dealing with this will no doubt propel the economy of Nigeria in an astonishing manner. 

2. Nigeria must drive towards the local refining of crude oil. Rather than spend funds on the so called infrastructures and embarking on the “palliative” that would avert the sufferings of Nigerians, the best activity the government can embark on is to divert the funds form subsidy removal into the provision of new refineries. The provision of these refineries would contribute more to the economy in two folds; 

a.         Nigeria would be able to meet the local oil needs of her people and also, 

b.         She would be able to meet her export needs, thus not just exporting oil in its crude form but also in its refined form. Most notable, the Nigerian crude is of a very high demand in the world. The high patronage of the Nigerian crude oil is due to its quality and nature of being the sweet crude oil which is known to contain less than 0.5% sulfur and is of high quality. Also, it is commonly used for processing into gasoline..

This would make the downstream more fairly competitive and opened as against the irregularities in the course of shamefully importing refined oil. Added to this, the creation of jobs will be achieved.

3. Somewhat away from fuel, it is high time the Federal Government of Nigeria granted every State of the federation a freehand to have a total control in its resources due to the fact that it would aid the economic security of the States added to bringing about competition among them. A great advantage to be noted from this is that it would foster development and avert the backwardness of some states in the federation, notably a handful of the northern states which have over the years slowed down the pace of development of the other regions that are more productive which go to any length to think outside the box. 

This point is due to the endless agitation of mostly the Niger-Delta states for a full control of its resources.

The Niger-Delta states are adversely hit by oil spills and I opine that the government close to them (respective state government) will be at the best position to adequately cater for her people.

Though the Ministry of Niger Delta and the Niger Delta Development Commission were statutorily founded to cater for the immediate needs of the people, thereby meeting their needs and complaints of environmental pollution and deprivation due to oil exploration, there is no way they will be able to meet these needs efficiently. The reason, these bodies are federal government inclined bodies or institutions that are far from the people as against a state founded institution that would be more efficacious due to its closeness to its people. 

In achieving the control of resources by states, the role of the federal government would be to check the activities of the states thereby litigating their excesses in order to bring to justice the governors and state government officials found culpable of corruption and illicit activities. 

4.         The Federal government should set up a committee that would be responsible for saving the country from the sin of refined petroleum importation.

This committee should be given a free hand to work with no form of interference from the government. In achieving this, the committee should be made to officially go to at least 2 of the following countries which are also OPEC member countries; Kuwait, Venezuela, Saudi Arabia or Qatar. These countries are all synonymously known to have an efficiently managed oil industry. For more information on the efficiency of these countries with regards to their economy and oil prices, Part 3 of this work explains further.

The purpose of this official visit to either of these countries would be to know how best to manage the Nigerian oil industry and gain knowledge of how they “did it and are still doing it right” thereby bringing the gained knowledge back to Nigeria and deal with the putrefied oil sector, thus ensuring Nigeria does it right too. After-all bilateral relationship among countries should also be targeted towards the exchange of ideas that should foster economic prosperity of one another.

5.         I will like to refer to the recommendation by a group of Anti Corruption Network led by Mr. Dino Melaye in a report by the Punch Newspapers, which proffered that the consequent probe and investigations currently being undertaken by the EFCC should not be restricted to the regime of President Goodluck Jonathan but all regimes, even as far back as 20years ago. 

I believe that the reason for this bright recommendation is guided by the need to ensure transparency and efficiency in investigations because disentangling just the ills in only the regime of Goodluck Jonathan would entail a cut of a branch from a tree with a spoilt root. 

Having appropriately effected all these and adding other approaches as deemed necessary, Nigeria would be ripe for a full removal of subsidy from its petroleum products which would geometrically lead to the government deservingly receiving the necessary support from Nigerians.

Among the many advantages this would have on Nigeria are;

• It would ensure the independence of Nigeria in the efficient management of its resources.
• An assuage of corruption in the downstream sector
• A avert of imported inflation due to the importation of refined oil from countries that may be inflation-risk countries.
• An economic strength propeller of Nigeria due to it aiding a change in the status of Nigeria from a richly blessed but economically impoverished country to a richly blessed and economically buoyant country 

All these said, I preach that the level of necessity that would lead to the effectiveness in the removal of subsidy is dependent on the readiness of Nigeria not to import refined oil anymore. 

Dear President Goodluck Jonathan, Nigerians are watching closely and are highly expectant of you to truly govern in the messiah way which widely accounted for the reason why you were the choice of the people in the 2011 elections.

God bless the Federal Republic of Nigeria.

THE END!!!

“Environmental issues in the Niger Delta” Wikipedia 28 Aug 2012 <http://en.wikipedia.org/wiki/Environmental_issues_in_the_Niger_Delta>

Iferi, Bennie. “Reps probe licenses to private refineries” Daily Times 10 December 2011. 28 Aug. 2012 <http://dailytimes.com.ng/article/reps-probe-licenses-private-refineries>

Taiwo, kehinde. “THE FUEL SUBSIDY SAGA IN NIGERIA: A drawback resulting from government inefficiency (Part 1)” My Mind Always 4 April 2012. 28 August 2012. <http://taiwokehinde-mymind.blogspot.com/2012/04/fuel-subsidy-saga-in-nigeria-drawback.html>

Taiwo, kehinde. “THE FUEL SUBSIDY SAGA IN NIGERIA: A drawback resulting from government inefficiency (Part 2)” My Mind Always  18 APRIL 2012. 28 August 2012.<http://taiwokehinde-mymind.blogspot.com/2012/04/fuel-subsidy-saga-in-nigeria-drawback_18.html>

                                                                                                                                                

Taiwo, kehinde. “THE FUEL SUBSIDY SAGA IN NIGERIA: A drawback resulting from government inefficiency (Part 3)” My Mind Always 25 May 2012. 28 Aug. 2012 <http://taiwokehinde-mymind.blogspot.com/2012/05/fuel-subsidy-saga-in-nigeria-drawback.html>

Taiwo, kehinde. “THE FUEL SUBSIDY SAGA IN NIGERIA: A drawback resulting from government inefficiency (Part 4)” My Mind Always June 6 2012. 28 August 2012. <http://taiwokehinde-mymind.blogspot.com/2012/06/fuel-subsidy-saga-in-nigeria-drawback.html>