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Deregulation: Measure to avert strike & fuel scarcity

By Poet Against Child Abuse

"These refineries are national assets that have high capacity to address our need for refined petroleum products, but they hardly produce anything inspite of huge government investment”…… Senator Emmanuel Paulker, Senate Committee on Petroleum (Downstream).


It seems that the Federal Government is confused about the deregulation it has slated for the downstream sector of the oil industry before the end of this year. Following that, we have learnt earlier this year and concurrently that oil workers under the aegis of the National Union of Petroleum and Natural Gas(NUPENG) and Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) have given the Federal Government notice to invalidate its assessment on deregulation and the planned privatisation of refineries or face manufacturing action. We have also learnt that the warning by the oil unions to embark on strike immediately there was signal that the meeting between the FG and labour leaders hit postponement rock. This, we have also learnt, was to make way for a more all-encompassing discourse to be synchronized by the Presidential Steering Committee on Global Economic Crisis; but for how long? Like many Nigerianshave cried against that move, there it was on newspapers early this year that the Senate Committee on Petroleum (Downstream) also faulted the full deregulation of the downstream sector by the Federal Government. The committee was quoted saying that the removal of the subsidy, which is a module of the policy, should have been gradual rather than hasty.


Following that, the action by the FG to deregulate this lower cartel of the oil sector should have had the face of democracy where opinion of stakeholders and the people should count before any policy could be voyaged to be implemented into the Acts of certain parastatals. A communiqué we learnt that were jointly signed by officials of PENGASSAN and of NUPENG early this year, said, the joint NEC in session unequivocally condemned and rejected the recent government hasty pronouncement on the total deregulation and planned privatization of the nation refineries, NGC and PPMC's through unilateral and executive fiat. The joint NEC in session agreed that the Federal Government be put on notice that at the end of 21-day ultimatum beginning from Tuesday 3rd March 2009, all oil and gas workers are to commence a three-day comprehensive and symbolic warning strike action.


While the FG was hasty to deregulate the downstream oil sector, it forgot that there is need to sign the Petroleum Industry Bill into law, and to implement the approved Oil and Gas Implementation Committee (OGIC) report by the Federal Executive Council (FEC)? What we expected the FG to do was to call for adequate security in the Niger Delta. Like some people would say, “Through aerial surveillance proactive measure”.


The various unions in Nigeria: Nigerian Labour Congress (NLC), Trade Union Congress(TUC), NUPENG and PENGASSAN should always force the government to arrive on a round table instead of gulping into industrial actions anytime the FG comes up with a policy that does not meet the eyes as this doesn't only affect the nation but severely the innocent citizens of our country. And the FG must make more consultations among the stakeholders before bringing up any policy to the Nigerian public, as this will allow the always burning anger of labour movements on the many heinous policies of the FG to rumble down. And the FG should stop the idea of sudden postponement of the talks with these unions, which always make a union like the NLC go in for a closed-door discussion with the leadership of the TUC and what Nigerians would see is strike. The Senate Committee on Petroleum (Downstream) should also canvass always that the privatisation of the nation's refineries, which another component of the policy, should be done through open, competitive and transparent process, instead of the recalcitrant ways of the Executive. We can remember that Chairman of the Committee, Senator Emmanuel Paulker, once said at a press conference in Abuja, that the issue should have been handled with caution since it affects a sensitive aspect of the people's lives.


In earnest, this writer strongly supported Paulker when he once said that the central responsibility of any government is to improve the welfare of the citizen. Therefore any policy on regulation or deregulation should be carefully crafted and targeted at fulfilling this responsibility. Our opinion is that we have to go with the global tradition and best practices in the sourcing, distribution and sale of petroleum products by allowing market forces to prevail in a well-supervised and legally enriched operational environment. It is therefore imperative that any policy of the government affecting this sensitive aspect of our lives should be handled with caution. The government has explained that the policy is geared toward improving efficiency in the refining, sourcing and distribution of petroleum products. Already, another committee has been set up by the Federal Government to draw up a programme for the implementation of the policy. On the removal of subsidy, reportedly he said the Committee believed that the government would have been compelled by the unsustainable fiscal burden involved in subsidising petroleum products to the tune of N640 billion in a single year. It was obvious that the government could not bear that burden endlessly. We have always believed that subsidy should be removed, although not in the abrupt way in which it has been done but through a gradual phasing-out process. The preference for this gradual process is based on the fact that there are elements different from the price of crude in the international market that add to the overall cost of petroleum products. These elements include: freight charges, port charges, cost of insurance, cost of bridging. If these cost elements are eliminated or reduced, there will be a reduction in the amount required for subsidy, if there would still be need for subsidy at all. We are therefore calling on the government to implement a phased deregulation exercise. And while that exercise is in progress, the government should adopt intermediate measures to tackle those foregoing elements that add to cost. For example, if the refineries are all functioning optimally, freight charges and port charges would be eliminated. Also, if we fix the pipelines that make up our distribution network and build new ones, the enormous cost incurred through haulage by trucks would fall, thereby contributing to reduction in the pump price of petroleum products.



But it's very saddening that while these measures were put in place, which will simply result in a less prohibitive and more affordable pump price when the phased deregulation exercise is concluded, however, the approach of the government to the matter lacks in proper consultation of the authorities concerned. Like Paulker reportedly said, if government had done adequate and proper consultation among stakeholders, the policy direction could have been better appreciated, the merits and demerits of the deregulation having been exhaustively discussed in a free atmosphere. There has been belated effort at consultation, but even this could be hampered by statements emanating from the government indicating that its position is non-negotiable. There is need for caution and consistency in order not to send wrong signals to the public. We therefore call on all stakeholders to thread with caution and avoid taking rigid positions in this obviously sensitive matter, as dialogue remains the only option for arriving at a resolution. It is pertinent to say that, at this moment when the Petroleum Industry Bill is before the National Assembly, certain actions on the part of government relating to the petroleum industry are capable of causing a mix-up in the appreciation of the direction the government is taking. Some government measures would seem to be pre-empting the Bill, and that should be avoided.


In Nigeria, our oil should be a blessing to us instead of the obverse we have always experienced as regards poverty, militancy, kidnapping and so fourth. Our oil should contribute to the growth of the economy and should not in anyway become a setback. Privatization has its merits and demerits, but before this could take place in the oil sector, the four refineries should be put in place of functioning before any competent organization should take over, if the FG insists on privatization. Like Paulker was quoted as saying, however, government should avoid any action that would amount to a repeat of the mistake of the last administration, which caused this administration to reverse the previous privatisation. The privatisation should be done through an open, competitive and transparent process. Government should also create an environment that is more conducive and more attractive for the establishment of private refineries, so we can increase our refining capacity and rely less on importation.


But in all these, it seems that the FG has a different plan if it is yet to put the refineries in place before insistence on deregulation. It is because this oil comes naturally from nature, if not, it would have towed the line of NITEL, Railway system etc. The government needs to address some pivotal issues to give hope that the planned full deregulation of the downstream petroleum sector will not be havoc inbuilt. Many Nigerians knew that the said deregulation will bring about sickness-free competition among the oil moguls, apart from ensuring product availability. And Nigerians have bemoaned the incessant change in policies immediately a new government comes to power. Many Nigerians in the oil field have said that to guarantee the success of deregulation, the government must have consistent policy framework, which will ensure safety of investment and sanctity of agreement. And that government should build vital infrastructure to support the success of deregulation, otherwise, deregulation will start with fuel scarcity, which is not right for the economy.


Suage Badey, son of late Mr. Albert Badey, one of the 4-Ogoni patriots murdered on disinformation by recalcitrant mob loyal to late Ken Saro-Wiwa, writes from Port Harcourt. Email: [email protected] Mobile: 08053188376

Development / Ghana / Africa / Modernghana.com