FUEL SUBSIDY REMOVAL: 'S'WEST GOVERNORS ARE A DISAPPOINTMENT'

Kayode Soremekun Professor of International Relations and Dean, College of Development Studies, Covenant University Ota, Ogun State, Kayode Soremekun, drawing on his research in the oil industry speaks to EMMANUEL ONYECHE on the burning issue of fuel subsidy removal and its linkage to the ongoing minimum wage debate

Governors initially tied their ability to pay the N18, 000 minimum wage to the removal of fuel subsidy. What are the implications of this decision, especially as the organised labour continues to kick against it?

Let me begin by attempting to disaggregate the issues. We are talking of fuel subsidy, minimum wage and the governors' forum. I think it is time to ask the fundamental question of whether there is in fact a subsidy. In answering this question, we have to examine the structure and nature of the Nigerian oil industry.

Nigeria has the crude oil but unfortunately, she is unable to add value to it. So, the government exports the crude, adds value to it elsewhere, creates jobs elsewhere for other nationals and, of course, the product then becomes more costly. So, in the bid to ensure its affordability, the refined product which originally belonged to us in the crude form, is then imported into the country and the government ensures that the market price is not paid.

The cost of the government's inefficiency and penchant for corruption which is why it is unable to add value to the crude, is now passed on to the citizens in the form of removal of fuel subsidy. I challenge the government by asking, is there any other OPEC member-state that indulges in this kind of wasteful practice of taking out its product, adding value to it elsewhere, creating jobs for other nationals and then going ahead to inflict the pain on its citizens?

You see a host of products are generated from crude namely gasoline, kerosene, chemicals and polymers. In other words, if the country is effectively represented in both the upstream and the downstream sectors of the oil industry, she would not need to import anything from anywhere in the world. That is why I consider it very tragic that in an oil producing country like ours, the government is contemplating the idea of removing subsidy.

What's your take on the Governors' Forum stance on the issue?

The striking thing about it is that this would be their first gift to the Nigerian populace after the elections. After all, they promised to make life better for the people. Again, I can almost forgive the governors from the other parties but I cannot extend the same benevolence to the governors of the Action Congress of Nigeria who were there when the fuel subsidy idea was mooted.

When they were coming into power, they explicitly said they were in for the Obafemi Awolowo kind of politics. They claimed to be sons of Awolowo.

Awolowo had a number of definite things to say about the petroleum industry and as a minister of finance in the 1960s, and during the civil war, he was the social force that pioneered the new direction for the Nigerian oil industry. He caused a document to be written that Nigeria should embark on a new petroleum policy path. He alerted Nigerians to the immense possibilities that could be obtained from the petroleum industry. I do not think these 'sons of Awolowo' appreciate these things.

At a point in time, the argument of the government was that a litre of petrol was cheaper than a bottle of coke. When they saw the bankruptcy in that argument, they abandoned it. They also said petrol was cheap in Nigeria because it was being smuggled across the border. Who is policing the borders? The government is more or less visiting its inefficiency on the populace. They lack the capacity to guide the borders and the capacity to add value to our refined products.

What is the solution? The government should retrace its step, go back to the drawing board and, as it were, put measures in place to ensure that the refineries are working because the technology is no longer rocket science.

Incidentally, Dr. Ngozi Okonjo-Iweala, in her testimony before the senate, spoke about the tons of money expended on Turn-Around-Maintenance. Apparently, the social forces involved in TAM have only turned around themselves. When we say these things, foreigners are reading these arguments on fuel subsidy and they would just be laughing at us.

But is minimum wage part of the equation? It is also scandalous. At a time in this country, somebody just decided that directors-general, the highest paid civil servants, should have their salaries moved from around N350,000 to over N1m every month. But in the same country, the issue of N18,000 minimum wage is being debated. There is enough money in the country to ensure a decent wage for workers. One of the governors, Rochas Okorocha of Imo State, has already demonstrated this by slashing his security vote from N6.5bn to N2.5bn.

I remember the earlier depositions of Comrade Adams Oshiomhole, who as labour leader said, 'If the governors stole less, they would be able to pay the minimum wage.' The Oshiomhole recipe still holds true today. Our memories are still there.

The problem boils down to our inability as a country to build new refineries or maintain the existing ones. Can President Goodluck Jonathan tackle these problems?

I am not sure and that is why we are alerting him to the issues. We know that now that he is in power, he could be overwhelmed by the advice he is given or he may not be aware of the issues that if we have functioning refineries, we would be at a completely different level and the whole idea of subsidy would not arise. In the context where the political class indulges in over-consumption and under-production in lifeclass and opulence, you wonder who is subsidising who? The average citizens are subsidising the political class. We should also go back to the latest statements by Nasir el-Rufai about the kind of scandalous sums allocated to security. This speaks volumes about the way the country is going.

With Petroleum Minister, Mrs. Diezani Alison-Madueke and Jonathan, does this combination inspire any confidence in the light of all you have said?

I know Diezani was a top executive of Shell and in the context of Nigeria, it is possible to say that Shell has successfully formalised a situation in which you can argue that it is in fact the Nigerian state and that the Nigerian state is Shell. Again, a number of reports have been coming up on the oil minister and I think if this administration is dedicated to governance, it will not go the way it has gone. Damning and sordid revelations have been made about the oil minister and she came up on television threatening to sue whoever wrote anything on her but she has not sued till now. I am surprised that in spite of all this, she was still appointed a minister. It tells you that the country is in for a long nightmare.

The interests that have grounded our refineries, are they more powerful than our government?

There are beneficiaries of decadence, just like our power or is it powerless sector where some people are benefiting from the inability of that sector. Government is just a collection of individuals drawn from society and who have links with the society and not just an abstract entity out there. It is unfortunate that government loyalty is more to themselves and their cabal and this continues to ensure our nightmare.

Are there countries getting it right that we can refer to?

Norway and Malaysia are good examples. They did not just focus on the money coming from the oil industry, they mastered the technical components of the oil industry and in the process, they are not discussing oil subsidy. They are discussing issues of full employment for their citizens courtesy of the industry. Even if Norway is too far, Malaysia came into the industry after Nigeria and she has been able to domesticate the industry and add value to it and to the standard of living of the people, which we have not been able to. The joke in the oil industry is that when the smallest tanker that takes crude oil away from Nigeria is processed and the various components are got, the money from that consignment is enough to pay all the salaries of the Nigerian members of staff in a company like Agip Oil. You can see that we have missed out completely.

Let's talk of high cost of governance and how it is affecting us in this country.

Obviously, it is too high. Are we really talking of the cost of governance or the cost of mal-governance? What we have on our hands is a case of so much going into governance and very little to show for it. I live in Ota and all the roads leading to Ota are bad and yet we are overloaded with all kinds of officials from the federal, state and the local governments and part of the problem is that all the industries are comatose and the private sector is in the doldrums. So what do you do, you have to create jobs for their favoured people. It is abnormal because there is no need for an over bloated cabinet or a retinue of aides because such people would have jobs elsewhere. Given the scandalous revelations about what it takes to run this country, then we begin to wonder if we have our heads in the right places. This is ironical given the civil society component and orientation of this administration.