December
9, 2011
Nigeria
is blessed with human and natural resources, but the country is lacking effective
policies to utilize such blessed resources. Edmund Burke, the great British
philosopher, said that government is a contrivance of human wisdom and the
wisdom should be used to satisfy people’s needs. Any government that can’t
satisfy the need of its people is irrelevant and will not be loved. The first refinery, in Port Harcourt, was
built in 1965; Warri refinery in 1978, Kaduna refinery in 1980 and the fourth
refinery which was called the new portharcourt refinery in 1984. All with a
total installed capacity of 445,000 barrels per day, has not in any way been
able to compete with our escalating population pegged at 167 million.
What has
been the picture? Emerging evidence before the senate committee probing the
petroleum subsidy regime appears to link the unsustainable growth in the volume
of imported petrol and kerosene to the significant rise in the level of subsidy
per litre. According to the committee, Domestic consumption in Nigeria
accounted for approximately 25.9million litre of PMS daily, in 2006. But the
figure had almost doubled to 43.1 million litres per day by 2010. The growth in
the volume of imported kerosene is just as dramatic, rising from 6.5 million
litres daily in 2006 to over 9million litres daily this year, as the subsidy
cash fuels smuggling and contamination, involving the growing mixture of
kerosene with the more expensive diesel. Also of note, is the volume of petrol
imported which grew by a marginal 2.3 per cent in 2007 year on year, 16.6 per
cent in 2008 and the volume shot up by a staggering 27.1 per cent in 2009, as
the subsidy level per liter rose.
In the
first ten months of this year, the non-NNPC share of the subsidy outstripped
that of the subsidy payment of the NNPC, reaching N1.34 trillion subsidy
payments so far made. This was accounted for by the expansion in the size of
independent marketers benefitting from the subsidy payment which grew from zero
in 2006 to 67 this year. If this is not a bazaar, please tell me why people are
killing themselves to import petrol? I feel strongly that the process of
verification described in the summary document by PPPRA, which was recently
presented to the senate committee would appear adequate, except that it does
not contain any mechanism for detecting or dealing with possible collusion
between all the parties involved in products certification. I therefore see
corruption as the bane of the Oil subsidy regime. Furthermore, evidences has
shown how ship owners and importers come to the designated discharge depots,
enter into arrangements which allow them to land just a portion of their cargo,
while the balance is taken right out of the country and they go on to collect
subsidy on 100 per cent of the cargo. This has been the practice over time.
How can
this effectively get to Nigerians? In a bid to identify and prosecute those
responsible for the failure of the downstream sector of the oil industry, I
want to canvass for a more comprehensive programme of reforms that would revive
domestic refining capacity and reduce the country’s dependence on importation
of petroleum products. By developing and implementing a three year strategic
and operational plan to increase domestic refining capacity to meet domestic
needs for petroleum products. I say three years because that is about the period
required to put a refinery in place. Our neighbour up north (Niger republic)
has just got theirs in place at exactly three years with an installed capacity
of 12,000 barrels per day.
Sincerity
and accountability of government is a major concern and unless we put sanctions
on corruptions, lawlessness, nobody will do the right thing. I call for an
independent probe of the cartel that has destroyed the downstream sector over
the years. The national assembly has a very important role to play in ensuring
a regulated frame work that will also include disciplinary (if possible, death)
measures that could be invoked on citizens that are found to have disobeyed the
law. Also government should strengthen our borders by effective monitoring to
curb the smuggling of petrol across the borders.
Petroleum
products are inputs in the production process of virtually all sectors of the
economy, the impact of increases in their prices needs to be evaluated on the
basis of the overall economy and not just the narrow sector of the downstream
oil industry and government revenue. The proposed policy would unleash chaos
and hardship in the informal sector of the nation’s economy which is the
mainstay of the poor. Unfortunately, the pricing of petroleum products cannot
be left for the market forces to determine on the ground that the demand for
petrol is inelastic. The masses will suffer if there is any further increase in
price of petroleum products. I therefore call on the government to encourage
private investors to build more refineries so that the demand for imported
products could be reduced. A downward movement in the price of oil at the
international market, which we cannot control, will set the economy of Nigeria tumbling to the ground. Nigerian economy is dependent on just one commodity (oil)
which is a very big risk. The instability in the international economy with big
economy running into depression is too glaring to ignore for Nigeria. Nigeria
must return from its wastefulness. For the sake of her future generations, this
Nation must get it right this time because there may not be another chance.
Tunji
Alu is a Comrade activist, a graduate of Geology and applied Geophysics, a
Lecturer and an engineer.
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