Most of us can read the writing on the wall; we just assume it's addressed to someone else.
Heart of the Matter an introduction
Fuel subsidy removal has been one of the most prevalent issues on the front burner in Nigeria and might not cease to be until the federal government positively decides to do so. It is no news that the FG subsidizes petroleum product for the Nigerian populace. The FG however, is weary of this responsibility and wishes to pass it on to the Nigerian publics who have vehemently refused it in the past. It should not take a prophet to tell the president, that another attempt would be met by either an equal resistance or perhaps worse i.e. a Nigerian version of the Arab spring.
The situation
Nationally owned refineries are in a state of limited functionality (figures continue to vary by the hour). This limited functionality of local refineries has brought about importation of refined petroleum products into a country rich (the sixth largest producer) in crude oil. The scenario: Marketer buys crude at OPEC prices, ships to refining country, lands product and transports it to the refinery there for refining. The product is then loaded to any means back to ships and then transported back to Nigerian ports where they are landed, further loaded to tankers who in turn bring them to the gas stations for onward purchase. Not a stroll by any imagination. The eventual cost of the product to save us the math is a lot higher than the sum Nigerians pay now per liter of PMS, AGO and DPK.
The government had to and indeed subsidized for these additional costs = shipping, landing, refining, distribution, administrative and all other costs. This subsidy runs into billions of Naira and according to the PPRA and NNPC this figure would run into trillions of Naira. It is this cost of subsidy that the government is determined to remove from its budget to enable it face other critical facets of national development.
Nigerians are a largely indifferent people owing to years of draconian military regimes that suppressed personal liberties. But make no mistake, attempts to worsen their already deplorable situation, will resort to a state of disorder making the London riots of 2011 a child’s play.
Logjam
The president can read the writing on the wall but assumes it is not for him. He stares aloof at it and goes on saying to the people that his government is determined to transform Nigeria by first destroying them. The general populace on the other hand through the media and social media argues that the subsidy removal would be counter productive as they cannot trust the government to keep to its promises.
Approach
The president tasks the NNPC and PPRA and some of its leaders to convince the people that it is right and that only a few people (marketers) are benefiting from the present situation. They sing of a future in which with deregulation in place, government will have the said subsidy billions to spend on agriculture, health and etc. The people argue back to the government asking it to fix/build new refineries and eliminate the unnecessary costs associated with fuel importation which led to the subsidies in the first place and there the governments refuse to take action.
So while the president and his helmsmen stare at the wall and assume typical Nigerian indifference, the people hope in typical Nigerian optimism that either party will accede to the other’s position. What an impasse.
Deregulation says the government is the only way. Other countries they argue have deregulated and the citizens enjoy the products at much cheaper rate with government’s hands off. They are quick to point out the telecoms industry where competition and innovation has brought about a decrease in price for the end user and they tell Nigerians with much vigor that the same will occur if they are patient to allow this necessary evil. Licenses have been awarded and in the near future when deregulation is fully in place, better refineries will be built by the private sector.
Deregulation itself
Deregulation, the panacea chosen by a PDP led FG has its proposed merits among which are market determined price of the products, availability, efficient supply and eventual price reduction or fluctuations as dictated by OPEC. We are blessed to live in an internet age and it is not difficult for anyone to find out that deregulation has worsened the lives of people in countries where the government decided to abdicate its responsibilities like in our case. South East Asia is a typical example where deregulation has not worked. The big companies there formed an unofficial cartel in an attempt to foster healthy competition and possibly eliminate the smaller players. Other evils which is presumed to be competition is large layoffs by the smaller companies and reduction of environmental safety.
The telecoms industry is quite and significantly different from the downstream sector. The level of innovation possible and achievable in that sector makes it possible for the players there to take advantage of and win certain shares of the market. Whereas, the downstream sector does not have such rooms leading to the scenario above where our people are further exploited. We cannot think that an oligopolistic tendency cannot surface here nor must anyone be fooled to think that there are no clear leaders in the downstream sector.
The costs of advertising with two radio stations are different for certain reasons: they have different reach, audience size, presenters etc. This cost could rise or fall as these indicators change but the same cannot be said of oil where the marketers form cartels and sign secret MOUs that our deregulation insistent government cannot control. Competition is not as true as it is in the downstream sector as it is true with other sectors.
The solution
The handwriting on the wall belongs to the government. They must act like the old pharaoh who quickly sought to prevent a situation in which lean cows would swallow fat ones and continue to look hungry. The government cannot wish away its responsibilities nor can it continue to force its failures on the people. A look at the system will show untold corruption and foul play on the part of an indolent government.
Before our very eyes, the government of Niger Republic has built a new refinery in a three year period. Just what has our own richer government done since this party won in 1999? It has continued to insist it will not build any refinery to meet local demand at a locally fixed price of crude. This stance is one which should be discarded. Licenses were issued to private refineries but none of them have begun operations. The case of their unwillingness to commence operation owing to a non deregulated sector is false. These companies cannot resume operations until the cost of doing business in Nigeria becomes affordable, a fact that only the FG has failed to recognize and address.
For true progress to be made, the government must first be willing to lighten the peoples' burden which is already too heavy. Government cronies who are the marketers today must be willing to delay bulk profits and stay true to competition. Nigerians must also continue to clamour for good governance at all levels as their indifference is a major factor in the country's stunted growth.
Heart of the Matter an introduction
Fuel subsidy removal has been one of the most prevalent issues on the front burner in Nigeria and might not cease to be until the federal government positively decides to do so. It is no news that the FG subsidizes petroleum product for the Nigerian populace. The FG however, is weary of this responsibility and wishes to pass it on to the Nigerian publics who have vehemently refused it in the past. It should not take a prophet to tell the president, that another attempt would be met by either an equal resistance or perhaps worse i.e. a Nigerian version of the Arab spring.
The situation
Nationally owned refineries are in a state of limited functionality (figures continue to vary by the hour). This limited functionality of local refineries has brought about importation of refined petroleum products into a country rich (the sixth largest producer) in crude oil. The scenario: Marketer buys crude at OPEC prices, ships to refining country, lands product and transports it to the refinery there for refining. The product is then loaded to any means back to ships and then transported back to Nigerian ports where they are landed, further loaded to tankers who in turn bring them to the gas stations for onward purchase. Not a stroll by any imagination. The eventual cost of the product to save us the math is a lot higher than the sum Nigerians pay now per liter of PMS, AGO and DPK.
The government had to and indeed subsidized for these additional costs = shipping, landing, refining, distribution, administrative and all other costs. This subsidy runs into billions of Naira and according to the PPRA and NNPC this figure would run into trillions of Naira. It is this cost of subsidy that the government is determined to remove from its budget to enable it face other critical facets of national development.
Nigerians are a largely indifferent people owing to years of draconian military regimes that suppressed personal liberties. But make no mistake, attempts to worsen their already deplorable situation, will resort to a state of disorder making the London riots of 2011 a child’s play.
Logjam
The president can read the writing on the wall but assumes it is not for him. He stares aloof at it and goes on saying to the people that his government is determined to transform Nigeria by first destroying them. The general populace on the other hand through the media and social media argues that the subsidy removal would be counter productive as they cannot trust the government to keep to its promises.
Approach
The president tasks the NNPC and PPRA and some of its leaders to convince the people that it is right and that only a few people (marketers) are benefiting from the present situation. They sing of a future in which with deregulation in place, government will have the said subsidy billions to spend on agriculture, health and etc. The people argue back to the government asking it to fix/build new refineries and eliminate the unnecessary costs associated with fuel importation which led to the subsidies in the first place and there the governments refuse to take action.
So while the president and his helmsmen stare at the wall and assume typical Nigerian indifference, the people hope in typical Nigerian optimism that either party will accede to the other’s position. What an impasse.
Deregulation says the government is the only way. Other countries they argue have deregulated and the citizens enjoy the products at much cheaper rate with government’s hands off. They are quick to point out the telecoms industry where competition and innovation has brought about a decrease in price for the end user and they tell Nigerians with much vigor that the same will occur if they are patient to allow this necessary evil. Licenses have been awarded and in the near future when deregulation is fully in place, better refineries will be built by the private sector.
Deregulation itself
Deregulation, the panacea chosen by a PDP led FG has its proposed merits among which are market determined price of the products, availability, efficient supply and eventual price reduction or fluctuations as dictated by OPEC. We are blessed to live in an internet age and it is not difficult for anyone to find out that deregulation has worsened the lives of people in countries where the government decided to abdicate its responsibilities like in our case. South East Asia is a typical example where deregulation has not worked. The big companies there formed an unofficial cartel in an attempt to foster healthy competition and possibly eliminate the smaller players. Other evils which is presumed to be competition is large layoffs by the smaller companies and reduction of environmental safety.
The telecoms industry is quite and significantly different from the downstream sector. The level of innovation possible and achievable in that sector makes it possible for the players there to take advantage of and win certain shares of the market. Whereas, the downstream sector does not have such rooms leading to the scenario above where our people are further exploited. We cannot think that an oligopolistic tendency cannot surface here nor must anyone be fooled to think that there are no clear leaders in the downstream sector.
The costs of advertising with two radio stations are different for certain reasons: they have different reach, audience size, presenters etc. This cost could rise or fall as these indicators change but the same cannot be said of oil where the marketers form cartels and sign secret MOUs that our deregulation insistent government cannot control. Competition is not as true as it is in the downstream sector as it is true with other sectors.
The solution
The handwriting on the wall belongs to the government. They must act like the old pharaoh who quickly sought to prevent a situation in which lean cows would swallow fat ones and continue to look hungry. The government cannot wish away its responsibilities nor can it continue to force its failures on the people. A look at the system will show untold corruption and foul play on the part of an indolent government.
Before our very eyes, the government of Niger Republic has built a new refinery in a three year period. Just what has our own richer government done since this party won in 1999? It has continued to insist it will not build any refinery to meet local demand at a locally fixed price of crude. This stance is one which should be discarded. Licenses were issued to private refineries but none of them have begun operations. The case of their unwillingness to commence operation owing to a non deregulated sector is false. These companies cannot resume operations until the cost of doing business in Nigeria becomes affordable, a fact that only the FG has failed to recognize and address.
For true progress to be made, the government must first be willing to lighten the peoples' burden which is already too heavy. Government cronies who are the marketers today must be willing to delay bulk profits and stay true to competition. Nigerians must also continue to clamour for good governance at all levels as their indifference is a major factor in the country's stunted growth.
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