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Published On: Wed, Sep 9th, 2020

Deregulation and sundry matters

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WEDNESDAY COLUMN by USSIJU MEDANER

info@medaner.com, justme4justice@yahoo.com

We wake up every new week to new uproar and new discourse. It has become relatively easier for writers to come up with discussions as they present themselves. Just last week, it was the twin issues of pump price increase and electricity bill upward review that didn’t go down well with quite a number of people. While I took my time to weigh what the responses to these events really are, I was torn between two distinct positions: a section of the citizens believed it was the right thing to do but it was coming at the wrong time; the other section was altogether against the increase in the two critical sectors of the national economy. Politically, as usual, politicians have wade into the events, taking advantage in all ways possible to discredit the facts of the events as they descend on the sitting government and president claiming the latter is insensitive to the plight of the citizens.
I am a Nigerian, and I perfectly understand the pain the citizens go through each time an increment is made to retail pump petroleum products; it would be an understatement to say that the livelihood of a great number of Nigerians depends on what is paid for the product directly and indirectly. Cost of transportation automatically goes up; prices of commodities, especially food items begin an upward trend; costs of other basic services are altered upward; and the economic fact is that our economy and energy need as a people revolves around the commodity and every little change in its cost creates a ripple effect on virtually every other sectors and activities of the citizens.
Unfortunately, it did not stop at an increment in pump price of petroleum products. Despite negotiation and various interventions to stop or delay upward review of energy billing for electricity consumers in the country, DISCOs have gone ahead to effect an increase in the cost of energy in the country. I seriously intend to contribute to these two critical events considering the bearings they have on all our lives. While presenting my opinion, I hope to stay as unbiased as possible, but then, whatever I write will remain my opinions and the way I reflect on the issues.
We are unnecessarily belated with too many issues as a country. We hardly have had time to rejoice or celebrate since the days I became conscious of national issues some twenty years ago. It is always from one unpalatable discourse to another; we do not relate with good things and improvements that happen in our body polity. To be straight and candid, we enjoy complaining and are regularly disproportionate in our understanding and analysis of events. The undisputed fact is that we do not objectively dissect and relate with events in the country; always finding a way to connect all events, regardless of their criticality with political opportunism. No doubt, the events were bad, but they have always remained bad and unresolvable while new events of similar status keep piling up on them, because our first reaction and disposition to these issues when they erupt have never portend the will to get the kind of solution we desire.
I am going to reflect on these issues one after the other; but creating a common ground to the general effect both are having on our economy and survival, I will first submit that currently, the majority of nations across the globe are struggling economically. For instance, food queues are springing up all over Europe with job loss on the rise at an unprecedented rate. Nations are raising taxes across the board to create funds for their economy with Britain being the latest to join the league a few days ago. America has in the last few months lost as much as 40 million jobs and raised its external debt by as much as 41 percent from $20.2 trillion to $28.5 trillion over the last three years. Every oil producing nation globally has had to recourse to raising the fuel price and taxes for survival. So, while we discuss and frown with the government decision to deregulate the nation’s oil and gas industry and begin an irreversible total removal of government subsidy from the product, we must also simultaneously relate with the nation’s need for the decision regardless of the timing of the implementation.
So, is deregulating the nation’s oil and gas industry the right way to go regardless of the timing? Or must it be connected to timing for the nation to do what it must do? If we mostly agree that deregulating the industry is the only way to savage the industry and give the nation the opportunity to benefit from its ownership of the resource, then, it is high time we asked ourselves what has this country and its population benefited from being an oil producing nation since 1959 when we studded the first oil field at Oloibiri? Of course, the answer is nothing much to be proud of from the outset, till the time when those in power literally destroyed the nation’s capacity to refine crude, it has been only a small section of Nigerians who have been taking the massive wealth of the nation via the exploitation, production and sales of the product. Regardless of whatever we have earned from the industry, Nigeria and Nigerians have forever remained impoverished and not benefiting from whatever comes from the oil and gas industry. The regime of subsidy was created by these same few men who, again, become the sole beneficiaries of the regime. The reality is that we have, as a country, been taken on a long ride.
I listened to the then coordinating minister of the economy and the minister of finance, Dr.Ngozi Iweala and also to former governor of the Central Bank, Sanusi Lamido Sanusi, making a case for the undisputable need for the outright removal of fuel subsidy; it remains unspeakable how those in power failure to muster the will to end the inglorious subsidy regime all along because those that are benefiting from it are equally strong enough to whip up public sentiments and to quash any action and attempt to do away with the regime – and this has inadvertently ruined our economy and placed us in perpetual struggling mode. How could we be earning less than we got from a resource as great as the crude oil. We ended up wasting resources that could have been used to solve a number of national challenges on subsidy and foreign exchange for refined petroleum products. The former Central Bank governor ended his speech that day by asking, if we need to pay salaries, provide infrastructure, develop our education sector, provide good health facilities for the citizens and still have to pay subsidies that means resources will not be available any longer to meet other needs, what would be our preference?
Government after government since the days of Babangida administration have been repeatedly informed that the only way to locally domicile the benefits of the industry for Nigeria is to deregulate the activities of the oil and gas industry; subsequently, attempts to gradually take off government participation in the industry, remove subsidy and open up the industry for open market operation has been a regular integral of all administrations. But somehow, we have not been able to achieve this much necessary reality for the industry because of our peculiarity of always seeing opportunity for political gains in every government decision and literally opposing all policies, regardless of how good and feasible they are.
The difference I have seen in the current government and decisions of Muhammadu Buhari is the obvious expression of the will to effect real changes in the oil and gas sector for the nation. It was becoming an impossible task for the nation to end the humiliating regime of petroleum scarcity and black market in the country; at that time, it almost totally became a part of our life. Regularly, and at least four times in every other year, we spent days and weeks struggling to access the commodity in filling stations and always ended up patronising black marketers who sell the product at almost 500 percent of whatever the official price was at the time. That was the time when Nigerians prefered and openly declared they wouldn’t mind buying the product at higher prices provided it is regularly available whenever they wanted it. I said the same years back. That was a season when the government was paying heavily on subsidies but still could not make the product available to the citizens easily – not at the filling station, yet it would be abundant by the roadsides where citizens are punished to pay exorbitant prices to these roadside marketers. The image of crowded filling stations where some vehicles spend days before they could access the product easily comes to mind; so also was the less talked about high rate of smuggling of petroleum products to neighbouring countries. The product can be purchased with ease since 2015, and arguably, smuggling of the products to neighbouring countries is no longer what it used to be and could become unprofitable with the new measure in place by the current government. Gradually and technically, the government began removal of the fuel subsidy and mulling the prospect of total deregulation of the industry. As far as I am concerned, the Administration has outperformed every other before it as far as the nation’s oil and gas industry is concerned.
More than ever before, it has become more obvious to us that Nigeria cannot sustain the subsidy regime, not just because it is economically not attractive but because it became enshrouded in massive corruption. The present Administration has realised that it is in the interest of the nation and Nigerians to allow free market determination of price of the product; allow free individuals and private operators in the industry while taking away all government direct participations in the industry. Doing that, will firstly end the corruption in the industry, increase government revenue base for infrastructural development, and create an open playing field for investors to seek opportunities in the sector, leading to more functioning refineries, petrochemical plants and increased domiciling of the benefits of the industry and the eventual fall in the price of the commodity by the operation of market forces. With deregulation, the price of the products will begin an up and down motion; it will now be in the hands of the market forces with no government job to pay extra to keep it fixed. If we get it right, overtime, we will see a reenactment of the mobile telecommunication industry cost drop by the market forces. We will see private refineries springing up and competing for market, but above all, we will see a cessation of annual N3 trillion unnecessary subsidy payment that discourages private investors.
The absolute removal of the fuel subsidy of the nation’s oil industry is perhaps one of the best decisions this government has made since it came on board in 2015. We may have to take it a little bit deeper by deregulating the sector totally; it is high time we began the end of the trillions of naira, the money lost in the murky water of the corruption laden subsidy regime every year. It is absurd that today, Atiku Abubakar and his running mate in the 2019 election, inclusive of their party, PDP, that became so vocal on the need to totally deregulate the nation’s oil industry to the point of openly canvassing for the outright sale of the nation’s top petroleum industry manager, NNPC, will today antagonise a government giving life to their wish. The supporters of PDP that was full of praise of Atiku’s Dubai strategy and white paper that boldly states his intention to take away all of government participation in the industry are the same who are on the street now protesting the fulfilment of their wish. The clergies and statesmen who all lined up behind Atiku and his manifestos are all out now protesting the soul of the same manifestos.
Of course, starting from now, there would be pressure and more pressure on the citizens, but it remains a necessary step for the nation to take. Agreed, deregulation and subsidy removal without factoring the effects on the citizens would create an initial but temporal hydra-headed socio-economic-political problems but the reality remains that the government has overtime begun the procedure for taking the mass effect off the populace. According to plan, by the first week of October, a number of filling stations in the country will begin the dispensing of Compressed Natural Gas (CNG); serving as alternative fuel for automobiles, and should this continue, would save costs to the tune of as much 40 percent compared to usage of PMS. At that point in time, investment in gas conversions and utilisation will become a positive for the nation, our importation of refined petroleum products will drastically dropped, working and emerging refineries in the country will just be able to meet our local need for refined products while we will begin to see, once again like in the old times, exportation of the refined products from our country, transportation cost will become considerably reduced, local demand for petrol will no doubt be adequately met forcing the price to go down with it; however you view it, it will become a win-win for Nigerians.
It is for this reason that full divesting to gas utilisation and conversion to CNG as alternative fuel of choice be accorded utmost alacrity by the present Administration as well as the total support from all the concerned sectors. As a country blessed with a huge gas reserve as ours, we cannot continue to moan under the weight of petroleum cost when we can access gas at a much cheaper price; not only cheaper but safer and cleaner. Needless to say, we have advised the government to set the foundation right for the nation’s regulation and control of its gas resource conversions and utilisation. To this end, we are of the opinion that rather than domiciling the regulation of the emerging prospect in the DPR and under the Ministry of Petroleum Resources, a new regulatory body, of the status of the Department of Petroleum Resources be set up to coordinate the nation’s interest in this promising prospect.
Then, to the issue of increase in electricity cost already effected by DISCOs, we must be more objective in our response and condemnations of the current Administration. As much as available facts on the activities of DISCOs are involved and the events leading to the eventual increase is concerned, the government did try its best; but DISCOs have the legal freedom and leeway to effect the increase whether the government approves or not. That is the reason the National Assembly could only plead for time before the new tariff regime resumed because they cannot stop it. At the unbundling of PHCN to DISCOs, the federal government literally sold the nation off to DISCOs – for reasons we cannot fathom – and make it very difficult for the nation to either end the faulty agreement it made with them or even control them literarily. It was the immediate past government that gave DISCOs the legal right to effect tariff increment every five years of operation without creating counter-measures such as clauses to dispossess them in case of poor services to the country. Under normal circumstance, we should have envisage the possibility of underperformance of the companies and the need for the termination of the contractual agreement, yet what the government did at that time was to allow the inclusion of the clause that made it difficult for the government to terminate the contracts with the DISCOs without heavy consequence on the nation. If we have to terminate the contracts, then the country must be ready to pay the companies a whopping $8 billion (N3.048 trillion).
The DISCOs are fully owned by Nigerians. Inefficient companies that do not in any way possess the wherewithal to create the necessary infrastructure to improve the electricity collection and distribution in the country and yet were given all the freedom to extort both the country and its citizens as we are experiencing now. Yet, Nigerians would willfully choose to unseen the illegalities that were perpetrated and legalised by the erstwhile PDP government but would eagerly expend all energy on the present Administration that is struggling to correct mistakes it did not make; we will pretend as if issues as the P&ID and the intentional selling off of the country to the DISCOs are normal because discussing them would make good a President and an administration we want to portray as bad on all front.
At this point, we can only assert that selling the nation’s electricity apparatus, the DISCOs with an $8 billion recovery clause by whoever, was evil, satanic, barbaric, unpatriotic and devoid of known logics. It is to these people who mortgaged the nation’s energy industry that our anger should be directed at. Mr. Tony Elumelu, Obinna Ufodu, Femi Otedola, Col. Sani Bello, Gen. Tunde Ogbeha, Olunbunmi Peters, Tonye Cole, Kola Adesina, Mr. and Mrs. Gbolade Osibodu, Shehu malami, Yusuf Hamisu Abubakar, Augustine Nwokocha, Gen. Abdulsalami Abubakar, Emeka Offor, Charles Momoh, Garba Mohammed Noma, the governments of Bayelsa, Cross river, Akwa Ibom and Rivers state, are Nigerians and the ones that owned the DISCOs; the ones that insist on getting the increase whether the government agreed or not. They are the ones who have not done anything to improve the lot of Nigerians in energy access but would go all the way to maximise their returns from a set of ventures they invest almost nothing in. These ones without exception were part of the same administration that handed over the companies to them and inserted the $8 billion disengagement clause in the agreement.
Inclusive of happening in the petroleum industry and the rise in electricity billing which are unavoidable, considering the nature of contractual agreement the immediate past administration had with the DISCOs, the current Administration has all along yet maintained payment of salaries to all government workers and even impacted the same on state governments that now have no option but to meet up with regular salary payment; unlike the sordid stories of the past whereby salaries of civil servants were owed for months running to years – and also contractors were not paid stalling projects. We have seen unprecedented improvement in real infrastructural development across the country; though, a section of the population have declared it is not infrastructure they want to eat, but it remains a fact that these developments – including the ongoing ones – are unprecedented and are not slowing down despite the notable global crash in oil prices, recession, and then COVID-19 pandemic.
Until Nigerians become more informed and get to the point and time when they can assess issues beyond face value and respond objectively and perhaps, constructively, else, we are not going to get anything right as a country. Until the narrative of the form “fuel was N87 naira during some past regime and now this Administration has made it what it is and created problems for the citizens,” we will continue to be foot soldiers to the evil men who are profiting from the wealth of the nation at our collective expense. We must equally remember that sometimes in 1998, during the administration at the time, the pump price of the same petrol was N11. If it was not static but rose to N85 from N11 in 1998, by 2014, then the narrative of blaming the current government for the unavoidable increment now should not be.
At a period like this, we need to ask specific questions from the President and handlers of the nation who oversees the unbundling of PHCN and handed over the DISCOs to the unqualified entities that are running it today? We need to ask what benefit they thought the nation will get from the $8 billion termination clause they inserted in the agreement and the allowance of the increment tariff every five years and for how long. We need to ask PDP why they supported Atiku Abubakar all out decision to disengage the government direct participation in the nation’s oil industry but are castigating the current government’s decision to do the same. Are they not all working for the interest of Nigeria? If someone follows the path you claimed is the best, shouldn’t you at least recognise and commend the person? Nigerians be wise.

GOD BLES THE FEDERAL REPUBLIC OF NIGERIA!

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