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FUEL: THE UNSPOKEN AGENDA

By NBF News
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Nigerians have really come a long way in trying to decode the secret message in the amoebic colorations of the fuel pricing mantras used by government, from the reign of Babangida, through Obasanjo to Jonathan. Specifically, the subtle deceit is in respect of managing the downstream petroleum industry; precisely, what price consumers should pay for petrol, kerosene, diesel and aviation fuel. The names of roads plied by Babangida-Obasanjo-Jonathan look different, but the destination or bus stop has been the same in the past 20 years.

Really, I don't like blaming others for my foolish decisions. But during the heat generated by the Structural Adjustment Programme (SAP), recommended by the International Monetary Fund (IMF) in the 90s, the Babangida regime embarked on a price-fixing mantra dubbed 'appropriate pricing of fuel'. The argument then was that the price of petrol was cheaper than a small bottle of Coke. There was no big deal then if, indeed, it was cheaper because most of the domestic fuel consumption was still refined locally. Since domestic refining was cheaper, the mantra of 'subsidy' did not arise.

Indeed, the NNPC made a handsome profit refining fuel for domestic needs from the nation's four refineries using surplus domestic crude oil. The only period there was subsidy in the 80s and early 90s, if there was any, was during the 90-day annual turn around maintenance (TAM) when a fraction of refined fuel needs was imported to bridge the supply gap created by one refinery being shut down for routine repairs to keep in top performance. Then the TAM was done by Nigerian engineers and technicians under the NNPC. What was imported then was not manpower but repair spare parts. It seems some persons saw the huge profit potentials in importing refined fuels instead of producing them locally.

What next?
Domestic refining was systemically crippled; as annual routine TAM of refineries was not done and this deliberate official neglect reduced the performance of refineries drastically. TAM in some refineries was not done in five, seven years leading to total collapse. The collapse led to contracting refinery repair to contractors, domestic and foreign, who did no better job than the local NNPC engineers. Local engineers became idle, largely as contractors took over repairs.

Things got really bad under the Abacha regime. A fuel import cabal emerged and jostled for importation licences. This was good business for the NNPC bureaucracy that dished out importation licences to those with deep pockets. Thereafter, the NNPC lost interest in repairing its own refineries. For, bureaucrats and their political masters in power were more comfortable with illicit profits from importation than domestic refining. Indeed, the then Head of State Gen. Sani Abacha reportedly owned a refinery in a neighbouring country from where Nigeria was served refined fuels while domestic refineries were more or less sabotaged.

The situation has got worse today. Politicians in government jostle for licences to import petroleum products and none jostles to make sure domestic refineries work well or that new ones should be built to cope with domestic demands.

With democracy being ushered in in 1999, Nigerians expressed great hopes that the monster of fuel pricing would be nailed. Rather than fuel hope by shunning previous failed economic and oil industry strategies, the great apostle of hope did no better than his predecessors. Obasanjo dusted up and rebranded Babangida's mantra of 'appropriate fuel pricing' and renamed it 'deregulation'.

Predictably, as usual, the floodgates of debates were opened, while the resident bureaucrats who spurned these mantra webs were ensconced in their offices ready to dish out the usual platitudes. Government, its agents mounted on rooftops, was no longer ready to feed the monster cabal who feast on subsidies paid by government to help the vulnerable cope with high price of refined fuels. With total 'deregulation', government would hands off management of domestic fuel distribution and allow the private sector marketers to take over and charge market prices. How would the masses cope? Don't worry, government would provide mass transit buses. A few dozens were provided in a few urban areas. But the hinterlands with roads hardly motorable by motorcycles and riverside areas with boats and canoes were never reckoned with.

At the peak of Obasanjo's so called deregulation, he did, ironically, set up a duplicate price fixing agency, the Petroleum Products Pricing Regulatory Agency (PPPRA). The PPPRA bureaucracy was now to perform the same simple price-fixing function of the NNPC. Apart from PPPRA bureaucracy adding to the cost of government, PPPRA was totally antithetical to a regime of deregulation, in which government has no right to fix price. The moment there is scarcity of a fuel or oil brand; competing marketers quickly take advantage of the supply-demand gap to introduce new brands or freshly enter the market to keep price from hitting the roof and to prevent cabalistic profiteers from holding the consumer to ransom. This free interplay of market forces is what we should be enjoying under a regime of genuine deregulation of petroleum products marketing. For now government is all in all and competition is stifled and consumers can't get the best price from thriving competition. This is the real issue that should engage public discourse.

For, what's the bid deal about regulating the price of kerosene, petrol and diesel if not for greed, oiled by official deceit? Confirming that Obasanjo's 'deregulation' was a smokescreen for price-fixing, petrol and kerosene prices were changed nine times in his eight years of presidency; yet the nation was still far from the shores of real deregulation. Sadly, Obasanjo's price fixing was preceded by the blackmail of acute petrol and kerosene scarcities that led to agonizing queues, disasters and deaths. The strategy to blackmail the citizens to accept a proposed increase is to orchestrate scarcity, following non discharge of dozens of imported fuel-laden ships until the scarcity is crippling enough to cow citizens to submission and accept whatever price is thereafter fixed.

President Goodluck Jonathan's mantra of 'removing fuel subsidies' is a marked departure from the fake 'appropriate pricing' and phantom 'deregulation'. Jonathan is very careful not to use the word deregulation; which is the ultimate if he is sincere in removing fuel subsidies. Why? The deregulation mantra of Obasanjo exposed official deceit, in that the landing cost template published by the NNPC during his era had exposed lots of hidden corruption charges labeled subsidies. Before the template publication was discontinued, the NNPC claimed many years ago that government paid a demurrage of N1.50k per litre of imported petrol and many other funny avoidable charges.

Later, it was revealed that the poor coordination of import arrivals led to about 30 ships arriving same time at the Lagos port, causing congestion and incurring of billions of naira demurrage for months. Some ships waited on the high seas for three, five to six months before getting space to discharge their cargoes, thereby incurring billions of naira demurrage charges, which are passed on to consumers as landing cost. In effect, the cost of corruption, greed and official inefficiency is what is largely translated as subsidies.

Now, the major unspoken issue is what type of deregulation or reform is Jonathan pursing? Does he just want to only increase fuel price and allow the cabal he has identified and wants to free Nigerians from its jaws, to go on with rogue business as usual, as his predecessors did? Or does he really want to genuinely free the domestic fuel market from the stranglehold of the bureaucracy, politicians and marketers? If Jonathan's intentions are genuine, why is it so difficult to sell his idea to the public or even the National Assembly which has publicly doubted him?

For Jonathan to demonstrate that he has the ultimate interest of Nigerians at heart and that he is not protecting the cabal as alleged by his traducers then he must embark on genuine deregulation forthwith. Genuine deregulation involves the dismantling of price-fixing agency PPPRA, abolishing of Petroleum Equalisation Fund (PEF) and stripping NNPC of fuel import licensing.

In deregulation there is no need to sell fuel same price countrywide. So there is no need for bridging costs through which marketers and government officials fleece the nation with But the half-measure and cloudy way he is going about his subsidy removal mantra is what fuels suspicions of deceit, going by experience. Once or twice bitten, two hundred times shy.

.Asuelimen writes from Ota, Ogun State.