Fuel scarcity again? Nigerians, let’s be wise!

Fuel queues returned to a number of Nigeria’s major cities including Lagos, Abuja, Owerri and Port Harcourt, cities which I traversed last week. I personally spent hours in a filling station in PH on my way to Kwale last weekend, forcing me to arrive late to the event I was attending in Delta State. And on top of that, I paid the market determined ‘deregulated price’.

Of course, that was not my real concern; I just wanted to get to my destination on time. And I did not, even after paying above ‘recommended’ price and haggling and begging at the only filling station selling fuel, as many were closed. Thursday, this week, I missed my flight to Owerri, because the road to the domestic airport in Lagos was blocked. By who? Lagos drivers queuing and struggling to buy fuel!

Truly, I have been through this scenario very many times in my life that I cannot even begin to count, though the frequency has been largely reduced in the last two years or so. But must we go through this at all? Why can’t we just drive or walk into the filling station and just fill our fuel tanks or buy diesel, kerosene or cooking gas without hassles. Why can’t I have the same experience as walking into a supermarket, a restaurant, a pharmacy, a bank, or a market and come out with my needs with minimum wahala? Why? Why?

When I tried to find out the cause(s) of this round of disruption of economic activities across the nation, the reasons were familiar. Many importers of petrol claim they have not been paid their subsidy rebates or they have been short-paid for earlier imports. Others claim they did not get early approval from Petroleum Pricing and Regulatory Agency (PPRA) to import.

Others blame NNPC and PPMC. Everybody is blaming somebody, while Nigerians go through pains buying fuel at inflated prices (when they find it) and from doubtful sources (jerry can-carrying fuel marketers on the highways) and the economy suffers as productive man- hours are lost in petrol queues. My question again is why must we be subjected to this seasonal malady?

It seems to me that this regular disruption of our economic life will not end until we end this fuel subsidy travesty. And it is clear also, that the fuel subsidy will not end until we fully deregulate the downstream petroleum sector on one hand and pass the Petroleum Industry Bill (PIB).

The Federal Government and it’s agencies have been struggling over the years to maintain regular supply of PMS at great cost to the Federation, but their best efforts (as we have seen in the last two years) will not guarantee unbroken supply as long as we have this subsidy reimbursement scheme and as long as we need to grant permission to import fuel.  It has not worked anywhere and import controls of essential commodities or utilities will always lead to broken supplies.

Look at what is happening with supply of kerosene. It is pitiable to see women, children and old men spend days in long queues looking to buy a bottle of kerosene. Why must we allow this spectacle to continue for so long and then keep supporting regulation and price controls? What is the cost of staying in queues for days and abandoning productive work?

What is more, this subsidy regime is unsustainable and is the cause of many of the maladies we are facing in this country today. First, it is consuming a disproportionate percentage of our National Income, sometimes as much as 50 percent as we saw in 2011. Even after the 2012 partial deregulation, our country is still ‘wasting’ between N1-1.5 trillion on subsidy claims by importers of petrol. I hope Nigerians realise what N1trillion can do for our infrastructure- economic or social. The N1 trillion budgeted for fuel subsidy in 2014 is about 24 percent of the total N4.6 trillion naira FGN budget of and compares favourably with the entire capital budget of the nation which is only slightly higher at N1.2 Trillion naira and only 26 percent of the total budget. This is one major reason our recurrent expenditure is eating up the entire budget at 74 percent in 2014.

If we compare the impact of only about 300 billion naira (equivalent to 30 percent of the N1 trillion budgeted for fuel subsidy payment in 2014 alone) of the subsidy savings utilised in the last two years by the  Federal SURE-P committee to accelerate completion of the Abuja-Abaji-Lokoja dual carriageway, the Kano- Maiduguri dualisation, the Benin-Ore- Shagamu expressway reconstruction, the Onitsha-Enugu highway reconstruction, and the East- West Road dualisation  in the Niger Delta, it may become clear to Nigerians what N1 trillion dedicated to infrastructural development can achieve in a short while. Now when we realise that the same N300 billion naira has been used to support the rehabilitation of the Lagos- Kano Western rail line and the ongoing PH-Makurdi-Maiduguri Eastern rail line rehabilitation, and the counterpart funding for the standard guage Abuja-Idu- Kaduna modern rail line, the value becomes clearer.

And then when it is fully realised that the same N300billion has been used to procure over 800 mass transit buses running across the nation; fund the ongoing Loko-Oweto bridge construction, provide initial counterpart funding to the 2nd Niger bridge, then the value becomes much more clearer. But when Nigerians realise that beyond roads, bridges and railways, the same N300 billion has enabled the provision of jobs for over 150,000 youths and women (including the disabled) through the various Safety Net programs of SURE-P, such as the Community Services, Women and Youth Employment ( CSWYE) Programme, the Graduate Internship scheme (GIS), the FERMA Public works program then the impact becomes overwhelmingly obvious.

Or are we talking of the drastic reduction in maternal and infant mortality rates occasioned by the Maternal And Child Healthcare (MCH) programme that has provided jobs for over 9,000 midwives, and village health workers who are spread over nearly 1,000 newly renovated Primary Healthcare Centres (PHCs), across the 36 States, plus the FCT, providing antenatal and primary health services to over 250,000 pregnant mothers and infants (as at end of 2013) including taking deliveries of new born babies in areas, Hitherto, pregnant women delivered at home or in quack maternity centres, with dastardly consequences. That is the impact of only N300 billion!

Can we then begin to imagine what can be done with an additional N1,000 billion a year if we stop this subsidy travesty now! I call it subsidy travesty because it looks to me Nigerians are burning candles on both ends. Except in some parts of Lagos and in the Abuja metropolis, hardly is petrol sold at the recommended price of N97 per litre. In most parts of Nigeria especially in the North and East of Nigeria, there has been full deregulation longtime ago. At normal times, every filling station sells petroleum products at their own prices. Some are even bold to advertise their prices on notice boards, damning DPR threats, while some others only use calculators to calculate prices and it is only after you have paid that you can determine cost per litre. Many commercial drivers, including okada riders, don’t care. They just deal on the naira value and care little about price per litre. So many Nigerians like me are exposed to double jeopardy. My country uses the money it would have used to build roads and run good schools and hospitals to importers of petrol and then I still end up buying fuel at the deregulated market price, as if there was no subsidy. Is this not double jeopardy? Who then is benefitting from the oil subsidy? Is it the licensed importers of petrol, or the retailers (owners of filling station), or the government (officials included) or the citizens? I am certain that not many citizens (ordinary, I mean), are getting the intended benefit. For the others, I suggest that they answer for themselves!

We speak of monumental corruption in the subsidy regime. The catastrophe of the 2011 and earlier year’s scams have not yet been resolved. It is alleged that the fuel subsidy payment for 2011 exceeded N2 trillion and  after all the razzmatazz and drama of investigations and threats, including that involving Otedola and Lawan Farouk, not much seems to have happened. Most of those accused are walking about freely. So why must Nigerians allow themselves to be fooled over and over. And yet some people are threatening that if the deregulation is completed, fully removing all forms of subsidy, they would set the nation ablaze or commit suicide! I do not understand the logic at all! How do we end the corruption if we do not stop what causes the corruption! By preaching only? By talking only? By complaining or just by criticising the government? Let us discontinue this subsidy travesty and let this oil subsidy corruption and waste cease!

Often I have heard People who oppose deregulation wonder why our refineries are not working. Some ( like the NLC) even suggest we should first get the local refineries working before we embark on deregulation. But I have always told them that they do not understand the fundamentals of economics. I ask: why have all those who got licenses to build private refineries several years ago failed to build? The simple reason the local refineries cannot work is that NNPC or whoever runs the local refineries are being forced to sell the refined products below cost, with a promise to receive subsidy rebates, which they only receive in a disjointed manner, sometimes over one year after selling the products at loss. Then when the scheduled maintenance time is due, they cannot execute, because they are waiting for the government to pay, and so they keep managing until the equipment breaks down. This would happen even in a corrupt-free environment. And then we go into the politics of Turnaround Maintenance (TAM), with the minister or some politician deciding who does the TAM!

If we want the refineries to work fellow Nigerians let us allow NNPC to refine and recover its cost at the pump station. Otherwise we shall continue to accuse NNPC of deducting at source! New refineries will be built if investors have an assurance that they can build their refineries and recover cost without having to sell at loss or below cost and then wait for a government agency to pay subsidy rebate. Nigerians let us be wise and persuade the government to complete the deregulation. That will be the ultimate game changer for our economy which at the end will benefit the ordinary citizens of Nigeria in a holistic and sustainable manner.

Mazi Sam Ohuabunwa OFR