ONE of the obviously well-meaning questions President Muhammadu Buhari asked during his electioneering campaign, for which he was justifiably lauded by Nigerians, was, “Who is subsidising who?”
He was responding to a question on the lingering issue of fuel subsidy which many at that time would consider unnecessary as the question suggests. And some would go further to portray the subsidy as a “scam”, a scheme by those in power to enrich fuel importers – a “cabal” of their “cronies” with whom they are in cahoots to enrich themselves at the expense of the nation through the importation and supposedly phoney subsidisation of a commodity we can produce in surplus locally, being the world’s seventh largest exporter of crude oil from which it is derived.
I recall when the video in which President Buhari, then an election candidate, made the poser was trending on social media. Many respondents, I inclusive, interpreted it as a sign that the “scam” of fuel subsidy and other unpleasant realities associated with petrol in our country – including its unpredictable scarcity – would be in the past as soon as he became president.
The fact, however, is that, though the fuel situation has slightly improved seven months into his tenure as president, the problems of its unpredictable scarcity and “unjustifiable” subsidisation, which he can be said to have inherited, are far from solved.
Just recently the nation was hit by yet another fuel scarcity, causing the pump price to spike illegally at many locations nationwide in what seemed a manifestation of the law of demand and supply, and spreading misery to broad swathes of the citizenry constrained to spend long hours in fuel queues.
In response, the government reportedly paid N413 billion as subsidy to fuel importers to renew the availability of the commodity at a time when the petrol output from our refineries is still far outstripped by its consumption rate.
In all, a lasting solution to our fuel problem remains far from sight despite government’s commitment to get the country’s four refineries working at full capacity. And even if that were achieved, in which case they would be refining an estimated 445,000 barrels of oil per day, their daily output of petrol would still be far lower than our estimated daily consumption of 40 million litres.
In the grind of the most recent fuel crisis, the World Bank reportedly called on the Nigerian government to remove fuel subsidy in its entirety, prompting labour to threaten a showdown if the call is heeded. I have brought in this connection with labour en passant to show how far-reaching our current problems with petrol can be, beyond their negative impact on the people’s welfare and our already straitened economy.
So far as we are genuinely interested in finding an enduring solution to our intractable problems of the fuel availability, its subsidy and needless importation, we should consider the possibility that the Petroleum Industry Bill (PIB) may hold the key to unlocking that solution.
Interestingly, the Director General of the Bureau of Public Enterprises (BPE), Mr. Benjamin Ezra Dikki, hinted at this possibility in a recent story published in The Sun newspaper of December 14, 2015, entitled “Delayed Passage of PIB Frustrating Economic Growth” (http://sunnewsonline.com/new/delayed-passage-of-pib-frustrating-economic-growth/). The story credited him with having warned that “the non-passage of [the] Petroleum Industrial Bill (PIB) is locking out investments that could grow the economy and create jobs” while receiving a team from the World Bank, led by Guillemette Jaffrin, who paid him a courtesy visit.
Besides being the head of the country’s privatisation agency, which makes him an authoritative voice on such matters, an understanding of what the PIB is meant to achieve and how the petroleum industry would be transformed in the aftermath of its passage should lend credence to his warning as self-justifying.
A simple explanation of the PIB is that it is a bill whose passage would enforce/strengthen deregulation in the petroleum industry. With the deregulation, private investors would have the opportunity to do business in the sector as owners of refineries. And with more of such investors operating refineries and outputting their products, there would be continuous improvement in the availability of petrol with the consequent elimination of scarcity.
And more jobs would be created along the entire value chain of the production and distribution of petroleum products, as more hands would be needed to sustain the attendant rise in production to meet local needs. And with local production able to meet local needs, fuel importation would become unnecessary, resulting in the reduction of capital flight through funds spent on fuel importation. Such funds would remain in our system to stimulate economic growth.
With deregulation and the participation of licensed private investors in the petroleum industry, the government can exercise the option of total disinvestment from the industry, thereby making its subsidisation of fuel unnecessary. And President Buhari’s question as to who is subsidising who would find a logical answer in that emergent scenario of the irrelevance of subsidy.
Deregulation in the aftermath of the passage of the PIB would further liberalise operations in the petroleum industry.
In effect, the key to ending the country’s perennial fuel problems might well be with the Senate whose responsibility it is to pass the PIB and the various stakeholders who should ensure the implementation of its provisions as a legislation.
GUARDIAN
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