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Published On: Tue, Jun 10th, 2014

The recurring fuel subsidy decimal

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By Ifeanyi Izeze

Trying to understand the way the Nigerian mind works should have been an impossible task even to Nostradamus, the man who saw tomorrow, if he were to live in this country by this time. Is it not a shame that what has delayed the Passage of the all-important Petroleum Industry Bill (PIB) at the National Assembly equally played out at the ongoing National Conference? How can you explain that the issue of total withdrawal of subsidy on petroleum products could split delegates at the national confab?

Even my own brother, Chief Mike Ozekhome’s argument was not only very surprising but outright uneducated. Hear the words of this same man who few weeks ago advocated federal government amnesty for the Edo boys that kidnapped him: “I have always argued in the last 25 years, when we were still selling a litre of fuel for about 25 kobo, that we cannot talk about removing of subsidy from a product you own. “Does a farmer subsidise a piece of yam he wants to eat in his family? Do you begin to take a knife and begin to measure and say for me to eat this, I must find out how much it was sold in the Utako Market or at Ogbete Market in Enugu, before I can allow my family to eat it? We do not subsidise our own product. I do not agree that there should be removal of any fuel subsidy.” Habamallam!
Where outside Abuja, except a very small part of Lagos, are Nigerians buying fuel at N97 per litre and you still have one full litre? These people coming with the naïve arguments in support of fuel subsidy, are they not aware that Petrol (PMS) sells for between N120 – N250 per litre depending on where you are in this country? Let’s not even talk of kerosene because for that, everybody simply sells at whatever price they want to even in Abuja. On what grounds are they arguing that the current subsidy regime was in the interest of the poor masses?
Of the battery of retail outlets (filling stations) belonging to both the major and independent marketers even few metres from the Port Harcourt Refinery through the entire stretch to Eleme Junction on the out sketch of the metropolis, which one sells at N97 per litre or even N100? So why are we deceiving ourselves? Meanwhile we were meant to believe that the Port Harcourt refinery is running at about 60 percent installed capacity. If we don’t buy at the government regulated prices within the same village (Eleme) where the fuel is produced, is it at Kula or Nembe on the offshore tip of Rivers and Bayelsa states that the products would sell at government prices? Abeg make we tell ourselves the truth!

Between 2006 and 2011, fuel subsidy payments accounted for 30 per cent of the total expenditure by the Federal Government which translated to 118 per cent of capital budget and 4.18 per cent of gross domestic product (GDP) as rebased. In 2012 and 2013, total payments to subsidise fuel for domestic use averaged N1.263 trillion. Is it not glaring that this had been a major financial burden the nation had been made to bear either for its actions or inactions or for outright lack of foresight in administration of our oil sector.
Would the passage of the Petroleum Industry Bill currently archived in the National Assembly, not address some of the statutory lapses in the administration of our downstream subsector which ofcourse includes every activity in the refining and distribution/availability of products across the country? This is what obtains in a country where the so called leadership and representatives of the people because of their myopic and self-serving interests could be rightly said to be working more against the interest of the interests of the same ordinary citizens they were supposed to protect.

Most Nigerians are unaware that the epileptic power supply situation experienced in the country today is traceable to this all-important bill sitting at the National Assembly. Without the passage of the bill, gas feedstocks needed to fire most of thermal generating stations under the National Independent Power Project (NIPP) would not come on stream as the issue of appropriate gas pricing is expected to be resolved or at least adequately addressed by the PIB.
The delay in the passage of this same bill is affecting everything in the nation’s oil sector- upstream, downstream. Those who know would agree that the lull or more aptly the near-zero activity in the nation’s upstream is orchestrated by the politics of the PIB. How many active rigs do we have in our arena- onshore/offshore? As at February, there were 31 active rigs in the Niger Delta and offshore representing a whopping 27 percent decline from the 43 active rigs six months ago (August 2013) and this is even a far cry from the over 58 rigs in 2012. Of the 31 rigs active in Nigeria as at February this year, how many of them were engaged in exploration play? None! Most of the rigs are just on workovers with few on appraisal assignments compared to say 2005 where 20 new exploratory wells were drilled in the country.

It should actually bother our lawmakers or maybe they don’t know that every year that passes with the uncertainty of how the PIB would turn out, activities in the oil sector particularly the upstream shrinks. The oil companies are just busy pumping from already flowing wells and ensuring they just continue to flow while they wait on our legislatures to do what would have been described as expedient.
Ifeanyi Izeze via

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