The last two or more months since President Goodluck Ebele Jonathan threw up to the Nigeria public the issue of removal or retention of petrol subsidy for debate has brought out the good and bad in Nigerian debating skills similar to what we witnessed when Ibrahim Babangida raised the issue of whether take up the IMF loan in the 1980s.
But it has been in the public hearings conducted by the Senate Committee on Petroleum Resources (Downstream) and the debate in the House of Representatives, both on the issue of removal or retention of petrol subsidy that we have seen and heard things on the issue that are ridiculously unreasonable, unsound, or incongruous.
That these utterly or obviously senseless, illogical, or untrue; contrary to all reason or common sense; laughably foolish or false: absurd explanations that are associated with extremely poor reasoning, the ridiculous, or nonsense have come from individuals and institutions that should know better is all the more laughable.
In the midst of these things on the removal or retention of fuel subsidies that are extremely unreasonable, so as to be foolish or not taken seriously, or the state of being so, have however come some glimmer of light that properly examined point the way to putting an end to this debate and taking needful action.
The first absurdity is the motion by the House of Representatives calling on President Goodluck Jonathan to retain the petrol subsidy because of the hardship increase in the pump price of petrol will bring on ordinary Nigerians, and to source funds from other sources to finance other items in the 2012 budget other than from subsidy savings.
This statement is absurd not only because the House of Representatives is calling on the Federal Government to continue borrow money to finance its budget deficit, but also because the House of Representatives are pretending not to know that the budget deficit has technically been removed based on the demands made by State Governors.
In the months of September and October 2011, State Governors have refused NNPC and PPPRA from making deductions for fuel subsidy from the Federation Account, a fact admitted by Governor Sule Lamido who said: Officially as a matter of the law, the subsidy is gone. If you look at our budget, the subsidy is gone but then the capacity to actually say it is what is lacking.
The second absurdity occurred when Ngozi Okonjo-Iwela, the Minister of Finance appeared before the Senate Joint Committee on Petroleum Resources (Downstream) and was asked to explain the difference between the amount earmarked for petrol subsidy in 2011 (N245.9billion) and the amount spent so far (N1.34billion), and she said that the Ministry of Petroleum Resources would be In a better position to explain that.
What our own Chancellor of the Exchequer or Secretary of the Treasury is technically saying is that she is not in a position to explain how over N1.1 trillion of unbudgeted expenses has been incurred by the Ministry of Petroleum Resources, the Nigeria National Petroleum Corporation, and the Petroleum Products Pricing and Regulatory Agency.
The third absurdity comes from Diezani Alison-Madueke, the Minister of Petroleum Resources when she told the Senate committee that NNPC is too big for Federal Government, is not subjected to the consolidated fund of FG, and cannot depend on federal budgets because it runs very capital intensive operations beyond what government can finance.
This mother of all absurdities has so many grave implications that the mildest way I can put it is that the tail (NNPC) is the one wagging the dog (Nigeria) inspite of the fact that NNPC is a statutory creation that is subject to the Nigerian constitution, and inspite of Dezani Alison-Madueke saying that NNPC functions largely like a private (secret?) commercial enterprise.
The forth absurdity comes from Austin Oniwon, the managing director of NNPC who could not supply ready answers to two questions by Senator. Bukola Saraki: What is the average capacity utilization of the refineries and what amount of PMS would the refineries give us for the months of October, November and December?
My take on this is that when the managing director of NNPC does not know the average capacity production of petrol by refineries under his control or the quantity of petrol NNPC will produce between now and December, how can he know what quantity of imported petrol is required to augment local production?
When NNPC is supposedly the one taking 445, 000 barrels of crude oil a day for local refining and no one knowing the exact quantity that is refined while the remaining is supposedly exported and sold, how can PPPRA, the agency that gives out petrol importation licenses to the 77 companies on its approved list know what quantity of petrol to import?
The fifth absurdity will have to be the release of the names of the 77 companies that are on the list of those given licenses by PPPRA to import petroleum products in 2011, with the added revelation that the number of companies involved in this milking of the cow has grown from 3 in 2006 to 77 in 2011. That is why I am not amused by the Senate Joint Committee's surprise that N600 billion was spent on petrol subsidy in 2010 with the amount almost tripling to N1.5 trillion by the end of December 2011, as if they are not aware that it will take more allocation of import licenses to satisfy 77 companies.
Now that we know the companies benefiting from the monkey-de-work, baboon-de-chop business called petrol subsidy, are we to continue with fuel importation and enriching these companies or do we deregulate and allow market forces to sanitize the business of fuel importation and ultimately building of new refineries in Nigeria?
In the midst of all these absurdities, the most enlightening issue that is indicative of what is to come when we finally come to terms with the need to move beyond petrol subsidy removal is the statement by Austin Oniwon that it cost between $4 and $5 to, depending on the exchange rate, to locally refine a barrel of oil, which is equivalent to 159 litres. Now that we know it costs NNPC, according to its managing director, N5 to produce a litre of petrol, it is clear that even when petrol is sold at N65 per litre Nigerians are the ones subsidizing government inefficiencies and that the additional N70 per litre being allegedly spent by the Federal Government on imported petrol is subsidy for the importers.
But as long as the local refineries are owned by Federal Government, they will remain dysfunctional and we will continue importing petrol and allegedly subsidizing it, and no private investor will build refineries in such a regulated environment as they will not be able to compete with NNPC and PPPRA. MTN, AIRTEL, ETISALAT, GLO, Starcoms, Visaphone, Multilinks, MainOne, Mobitel, and others would not be active players in the telecommunications sector today but for the deregulation in that sector, and neither will any private refinery be built in Nigeria as long as Federal Government is the dominant player As call rates have moved from per minute to per second billing, and continue to fall drastically due to competition giving Nigerians a wide range of options, so also the pump price of petrol will eventually fall as competition and the wide range of options available to Nigerians kick in.
The issue is not really the removal or retention of subsidy, but the disengagement of Federal Government, NNPC and PPPRA from the petroleum products sector and the elevation of the Department of Petroleum
Resources to the role of regulator like National Broadcasting Commission and the National Communications Commission.
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