Peace
Last February, the presidency made a pronouncement. It said it would embark on deregulation of the downstream oil sector. I applauded the decision in my piece on March 2. The motivation for the government was the increasing inability of the government to pay the subsidy on imported petroleum products, and not really a matter of economic policy conviction. This is the first dangerous aspect.
Recall that the economic policy announcement came after a meeting of the presidential steering committee in response to the global economic crisis. Members of this committee included those outside the Federal Government and some not in government at all. This information is necessary so we can appreciate the conditions through which the president may have been persuaded to abandon the regulated and uniform price policy of the Federal Government. This is the second dangerous aspect.
The dangerous aspects of this policy and the position of the policy now, can be understood in the context that the policy pronouncement was not motivated by some benefits of the programme and not by those that will carry out the policy. I am convinced that the policy is now dead and virtually buried on these two disabled legs. The president had made knee jerk economic policy pronouncement without adequate consultation.
Since the pronouncement, we have been through a classic effect of turning economics on its head fuel scarcity. At the peak of fuel scarcity!, the government, led by the president, caught cold over the policy. The accusation was that petroleum marketers were holding the country to ransom. But swiftly as outstanding subsidies owed were paid, fuel started flowing freely from our pumps. In effect, the deregulation policy is simply buried under the pretext that government was working out a suitable programme of delivery.
Read Also: Kwara govt says state resources too lean to grant labour request now
Now, I have come to the conclusion that there are three sets of people against deregulation of petroleum prices. The first is organised labour . The second are those that directly benefit from this messy and enthrenched economic disaster. The third are those that are simply ignorant of the activities of the first two sets of people and the benefits of a deregulation.
Labour is against deregulation because it sees increases in the price of petroleum products that will follow to mean more hardship for workers. According to labour, people are already poor and any increase in price will add to their poverty. To this set of people, poverty is absolute. In my economics, it is not. But that argument is only necessary if I think they are sincere. But I am not deceived, very, and very few people in any kind of union in Nigeria care about the poor. Never mind their khakis and rhetorics, they are rich, and they are personally benefiting from a corrupt and bastardised system. Are those in the oil industry unions not part of the racket? Was labour not among those that colluded to collapse the four refineries? So, labour fighting for the poor is like me pretending that officials of Nigeria Union of Journalist (NUJ) are looking after my interest.
To the stakeholders of any kind, the stakes are much higher. These are those that are in charge and directly benefit from this most hypocritical of economic policy. First, this subsidy is not part of any FG budget. That says alot about transparency. Okay, are the oil ministers or advisers genuinely aware or genuinely pretending that petrol is not sold for a uniform price across the country? There was the funny story of one of my colleagues telling a minister that such is the case, but his response was that he should report such a filling station. And think of it, if I’m privileged to sit in my Lekki, Ikoyi or Asokoro residence benefiting full time from a disingenuous system, do you expect me to sit down idly when government wants to put an end to such a policy?
Now, when I put forward arguments in favour of deregulation, some would think I am wealthy, so I can afford to make such an argument. I have made the argument in different dimensions, at least five times in the last one year alone, and I am not wealthy. But, as a good economist (see my piece of 18 May), I forsee the investment, jobs, income, other multipliers of deregulating oil price, even if the government goes ahead to waste the figures currently being spent on subsidies. In effect, even if the government goes ahead to waste money currently being spent on subsidy, just as it does now with what use to go to Nitel, Nafcon, Nigerdock etc, it will still be positively beneficial to the whole economy and the poor.
However this whole thing raises the issue of how economic policies are handled by this government. It appears that this government has reduced economic policy and management to preparation and execution of budgets, and that it gets wrong too. The faithful application of the budget can only add a little to the economic progress required in the country. The greater work needed is to bring about economic policy that changes the incentive system for improved allocation of resources with the aim of increased production that generates greater economic growth and thus leads to development. Have you seen any tangible policy in the last two years? Power policy is in crisis, monies are being returned year-after-year, and it is very difficult, as much as one tries, to see where this government is heading in terms of economic direction. Oh Lord, please have mercy!!!!!!!!!
