Former British Prime Minister, Baroness Margaret Thatcher, seemed to possess the uncanny gift of clairvoyance, which is now the saving grace of the British economy decades after she left office in 1990. The economy was manufacturing-based with the power base situated in the north of England, and the unions as strong as the Rock of Gibraltar. The production and exportation of cars like Vauxhall and Morris Minor was at its apogee, but the “Iron Lady” foresaw the future in the creation of a service-based economy, and barely six months later had she abolished exchange controls in the London Stock Exchange which saw a massive influx of foreign capital into Britain. She sturdily followed this up in 1986 when the stock exchange got completely deregulated and London was transformed into a global economic power hub at par with New York. Agreed, the north of England suffered as economic power shifted to the south but things panned out in the end. Imagine the fate of Britain now in the face of increasing competition from Japan, China and South Korea that has rendered the Vauxhall and Morris Minor obsolete. How would the former number one world coloniser have been, if not for the visionary leadership of the baroness who put her foot down and insisted on the shift from manufacturing to the service sector? They would have been worse than caught in the middle.
There have been debates raging on for a long time as to whether the fuel subsidy should go. The country has been largely polarised into two camps – the Nigerian Labour Congress/Trade Union Congress who are clamouring for the continuation of subsidy under the guise that it is the few benefits the masses enjoy, and the apologists of the laissez-faire system who believe the market forces is king.
The tragedy is that 90 per cent of Nigerians do not even enjoy the so-called subsidy, as the ‘gains’ is largely restricted to Abuja, Port Harcourt, Lagos and a few commercial cities. The rag tag and bob tail in the hinterlands buy petrol from N100 and above. Some, especially in the North, pay as high as N300 per litre. Many of the parasitic rich still pay the same price as the oppressed impoverished. Where then is the fairness?
It is an unsustainable economic drain that gives rise to round-tripping and a needless carryover of expenditures annually. Subsidy payments gulped about 25 per cent of the 2013 budget. The five-year presidency of Goodluck Jonathan saw a whopping $7 billion being sunk in subsidy. In May 2012, media giants, Thomson Reuters, reported that $6.8 billion was sunk into a mind-boggling scam during which Jonathan was pressurised to prosecute some top officials. The subsidy payments between 2009 and 2011 were fraught with endemic corruption and entrenched inefficiencies. Importers were being paid for 59 million litres a day while what was actually consumed was 35 million litres. Mismanagement and graft on the part of the government officials within that period cost the government $6.8 billion – about a quarter of the country’s annual budget. Nigeria spent N2.58 trillion on fuel subsidy in 2011 – 900 per cent more than the $24.5 billion in the budget with the excess being over half of the 2011 federal budget.
The Nigerian National Petroleum Corporation (NNPC) was accountable to no one. It once owed the federal government $7.4 billion in unremitted funds. The former Petroleum Minister, Diezani Alison-Madueke, was both on the board of the NNPC and the Petroleum Products Pricing Regulatory Agency (PPPRA) – the supervisor of the subsidy regulation. The number of subsidy beneficiaries has kept increasing by the day. From five in 2006 to 19 in 2008 and 140 in 2011 – all jostling for space to partake in the free bonanza. Many firms existed only on paper and collected subsidies for petroleum products they didn’t import.
I am an unrepentant advocate of the sale of the refineries as opposed to the fraud called turn-around maintenance (TAM) that has made the likes of Sir Emeka Offor of Chrome emergency billionaires. In decent societies, the Oraifite-born high chief would be languishing behind bars, but the cannibalistic jungle called Nigeria elevated him to a major party donor before the beneficiary of his ‘hard work’ was thrown out of office by the exasperated Nigerian people. If the four refineries are sold, they would achieve the refining capacity of 1.2 million barrels per day. If the natural gas production of 7.3 cubic tonnes per day is allowed to see the light of day aided by the optimal refining capacity, it will generate such a ripple effect in the economy that Nigeria will automatically become a massive exporter of fertilisers and petro-chemical products, and the downstream sector of the oil and gas industry will be greatly revamped.
Buhari’s insight into his agenda for the oil and gas sector, which is the goose that lays the golden egg, is rather wobbly. “I have received a lot of literature on the need to remove subsidy, but much of it has no depth.” The wish of a subsidy-free nation appears to still be worse than the combination of a mirage and a pipe dream.
The appointment of the Harvard-trained Dr. Emmanuel Ibe Kachikwu to the helm of the NNPC is akin to a Daniel that has come to judgment. He has not been shy to hide his disdain for the gargantuan fraud called subsidy and has expressed his desire not only for its removal but for the sale of the refineries as well. The reason riots erupted in 2012 when Jonathan yanked it off on New Year’s Day was because there was no visible buffer to alleviate the shock till the market forces stabilise and force down the prices. These buffers like the working of the refineries, which will stop the massive importation of petroleum products, seems more likely to happen under the Buhari administration. Incidentally, Buhari was petroleum minister under the military regime of Olusegun Obasanjo in the 1970s. We are not likely to witness the alleged scandals that marred the sector under Jonathan.
As Buhari has promised Nigerians to constitute his cabinet this month, it is our hope that fuel subsidy removal will be a key thrust of his administration, which will endear him to the hearts of Nigerians decades after his government would have come to an end. The time to set the agenda is now, more especially as the United Nations has alerted us to the old swansong of the need for us to diversify our mono economy, as the continued dependence on the black gold, with its falling prices will make us end up like Rip Van Winkle in the award-winning post-independence American play.