The last three weeks saw us through issues I thought we needed to discuss openly and freely as Nigerians with a view to finding solutions that are home-grown and might bail us out and show how serious, desirous and ingenious we are in moving our country forward or taking our country to greater heights—if we are actually at a great height. Of course, we like those appellations of greatness like ‘giant of Africa’ and ‘the largest economy in Africa’ even when we know the country exhibits clearly the characteristics of an underdeveloped economy.
In the ‘Let’s talk about it’ series, I raised three issues, namely: electricity, corruption and political economy. As if in support of the series, Transparency International came up last week with a report that said Nigeria, with about five different corruption agencies funded with taxpayers’ money, now ranks second in Africa and 154 out of 180 countries in the world on the 2021 Corruption Perceptions Index! Also, an app to fight corruption in the country, introduced by a concerned citizen, Kazeem Durodoye, was launched in the past week. How the app will work is still hazy to some of us trying to grasp the technological handle but the aim of the innovation is indicative of the depth of citizens’ concern about corruption. Actually, we are now in the claws of corruption and the need to talk about it has been strengthened by recent happenings. The topic of the day is not about corruption but which topic in Nigeria is corruption-free?
Fuel subsidy remains a recurring decimal in the Nigerian political economy and was one of the planks upon which the present government campaigned for votes in the 2015 elections. The promise then was that an All Progressives Congress Federal Government would not only end the fuel subsidy trauma, and it was a trauma, but would bring down the retail price of fuel to below N100 per litre. We are living witnesses to what has happened to oil prices and fuel subsidy since 2015. A number of times, this government claimed it had removed the subsidy only to come back to threaten its removal. So long as we import refined fuel and the international price of crude oil rises, which should make us happy in terms of revenue, the subsidy talk will always resurface.
All issues of subsidy are shrouded in secrecy and thus lack transparency and accountability. During the periods of President Musa Yar’adua and President Goodluck Jonathan, the importation of fuel was undertaken by individuals and registered corporate bodies. The report that the system was fraught with corruption led to the change in policy that Nigerian National Petroleum Corporation should be the sole importer of the product. How clean, how transparent and how accountable is NNPC? A corporation that cannot run oil production successfully yet claims to be paying its staff, who are working in moribund refineries, humongous salaries every month and twelve times a year! A company that produced the Dezianis of this world! That is what Yorubas would call ole gbe, ole gba, literarily saying from fry pan to fire!
Since the NNPC took over, the subsidy cost has been rising. The domestic consumption of imported oil has surprisingly been increasing in the face of increasing poverty, loss of jobs, grounded vehicles and the recent COVID-19 lockdown. Recently, it was being claimed that the domestic consumption of petrol per day had reached 65 million, or more, per day. There is the need to present the database in a country that lacks appropriate or genuine data. All the trucks plying roads and big companies use diesel which subsidy had been removed. Highbrow houses in estates use diesel and the same with medium-sized farms and other enterprises. So which vehicles and machines use 65 million litres of fuel per day? Allocation of N3 trillion for subsidy is fraudulent and the president must show concern.
It is a shame that Nigeria has to import 100 per cent of its fuel, not only losing money but also losing over fifteen by-products of crude oil. This is the only oil-exporting country in the world that does so. Is it that the citizens have to be punished with petroleum shortages, unpredictable prices and oil-induced stress or high blood pressure for the foolishness of the leaders? It is time we changed the narratives. We should not be interested in oil subsidy again but in domestic fuel production.
It is time to insist that domestic production must commence or revive immediately. Over the years we have had turnaround maintenance, which has turned the lives of people, rather than the refineries, around for good. There was a General Manager that promised the refineries would work within three months of his assumption of office but spent two years without success, yet retired with his head high for failure! There must be things he did that only the eagle-eyed could see. I have asked the question before that if the refineries are not working, why is NNPC paying staff particularly those in the technical section? There were also stories that the workers were against the sale or commercialisation of the refineries. Are they happy being paid for leisure than for productivity? As experts, whoever takes over the refineries would need their services. Thus, their jobs are largely secured.
How the country gets to produce fuel locally is entirely the business of the government, but a few suggestions can be volunteered for consideration. First, the refineries, in successive stages, can be run as joint venture businesses with local or foreign partners that have technical expertise and funds or sold outright to local or foreign firms. Secondly, there must be a way of assisting Aliko Dangote, and those who have modular licenses, to shorten their production commencement time and, as intervention or support, the crude oil could be sold at discount for the first twelve months and tax incentive for another 18 to 24 months as a period of stabilisation. In addition, those businesses that have had the license for modular for two years without action should be terminated and given to firms, local or foreign, who are ready and willing to go into operation without delay.
Why do we have multiple illegal refineries? We can claim that it is because of corruption but it is also because the formal sector gives room for it. The formal sector cannot meet up with supply. If there had been supply but no demand, the business would have stopped. The operators have tasted the wealth therefrom and the more you drive them, the more daring they become. The only way to stop the business is to formalise the trade. I understand that all they produce is kerosene because that is where the technology they have can take them. Let us fund the University of Petroleum Studies and petroleum departments in some universities with a timeline to research into how to assist them to improve on their modus operandi while, in the meantime, the by-products of their operations are collected by bigger and modern refineries for further processing that will stop the quantum of hydrocarbon in the air and water pollution. They get their crude oil through the vandalisation of pipelines. That is, it cost them nothing financially but cost the government or companies that own the pipeline huge sums. So, providing crude oil for their businesses at the initial stage at close to zero cost would save the cost of vandalisation and air pollution.
Advantages of encouraging domestic production rather than hankering after fuel subsidy retention or removal are quite many. Apart from the fact that it cuts off the corruption chain that is typical of the fuel subsidy, the government does not need to allocate part of the inadequate revenue for petroleum subsidy; the firms involved in the production will employ staff, reducing unemployment and the government collects revenue from the businesses in form of excise tax, profit tax and VAT as well as personal income tax from employees and shareholders. More importantly, all the by-products such as motor engine oil, brake fluid, including bitumen, which are normally lost in external refining, become available in the economy, extending the value chain and promoting the petrochemical industry. What else could be more rewarding? Has the government had the strong will to pursue this path? Do we as citizens have the will to force the government to do what is right for the economy and our living conditions? The fault to act right, definitely, is not in our stars but in ourselves.
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