By Jaye Gaskia
In the course of the past year, and
more precisely since about June 2011 when the Minister of Finance and Coordinating
Minister of the Economy (MoF/CMoE) presented the Medium–Term Expenditure framework
to the National Assembly (NASS) indicating the intention of the then newly
elected government of President Goodluck Ebele Jonathan (GEJ) to end the policy
of fuel subsidy, I had been writing extensively on the fuel price hike-fuel
subsidy issue.
Events and revelations since our
January Uprising, which was after all triggered by the implementation of that
policy, and which was organised as a resistance to the fuel price hike; and in
particular some of the most recent events, compel me to once again write on
this issue.
My motivation in writing yet again on
this issue, and during this period is two-fold; the first is the necessity to
reflect on happenings with respect to the issue since the January Uprising;
while the second is necessitated by an obligation to explore and explode some
of the subsisting and newly fashioned myths around the fuel subsidy crisis.
My contention remains (and events since
January have confirmed their accuracy) that a lot of lies, evolving into myths
have been spurn by a regime so enmeshed and entangled in the pervasive
corruption that has undermined the petroleum sector in particular, and the
national economy in general, to cover up the grand looting of the treasury that
is going on, and throw discerning citizens off the track of the real and actual
culprits.
Let me explain:
• The regime claimed
and still claims that a cabal (whose composition it refused to reveal until the
January Uprising and the various probes forced its hands) is responsible for
the mess in the petroleum sector; that it is the sole beneficiary of the
subsidy regime; and furthermore that the regime was powerless against it! From
these the regime concluded that the cabal (which was committing crimes) could
only be dealt with by ending the subsidy regime and hiking the pump price of
PMS as a consequence.
In this scenario, a cabal implicated in
large scale endemic and persistent economic crime, would have been left
unidentified, unpunished and actually allowed to continue to make profits from
the lucrative petroleum products importation business. This was the scenario
initiated by the January 1st commencement of implementation of the
policy and consequent announcement of hiked fuel prices. If we had not fought
in January, without the January Uprising, the outcome of this policy thrust
would have been that fuel marketers and their collaborators and benefactors in
government would have continued to import refined products unscrutinised, while
solely determining the quantity to be imported and therefore becoming the sole
determinants of the Daily Consumption Rate of PMS.
This is because merely ‘ending the
subsidy regime’ would only achieve one single thing definitively; this is that
the cost of paying for the full price of the product would only have been
transferred from the government purse to the private pockets of individual
citizens at the point of sale. This is neither punishment nor disincentive for
the cabal. As long as they can recover costs fully from the pump price, it does
not affect them negatively at all. It is important to make this point in order
to deflate and explode new myths being woven that those who refused to name the
cabal and punish them before January, those whose solution in January was to
simply transfer the cost of feathering the nest of the cabal from public purse
to private purse, were in some way those who were fighting the cabal and were
thus the enemies, not friends and protectors of the cabal!
• Next, it is
important to pause at this point to once again reiterate just where the root
cause of this crisis lies; and how this regime has done precious little since
the January Uprising to address these, in part because as a regime, its members
reaching to the highest levels, are perhaps deeply involved in the grand
looting that is going on.
What were these root causes and what
are their implications? As long as we continue to import refined products; and
as long as the Naira is floated against other currencies, the landing cost of
imported PMS will continue to vary, and more likely rise over time. The
implication of this is that pump price will almost certainly always have the
tendency to keep rising. The further implication of this is that with a subsidy
regime in place, no matter what you do, there will always arise a subsidy, and
this subsidy component will almost certainly have a tendency to rise and
increase over time.
This in part is at the root of why the
government is unable to accurately project the yearly subsidy cost in its
budgets. For instance, at a January landing cost of N141 per liter, the
implied subsidy as at that time with a pump price of N97 per liter would have
been N44 per liter. However this landing cost has varied significantly since
then, hence the inability to accurately predict the subsidy cost, and therefore
the tendency towards eroding the potentially saved cost for SURE – P.
The alternative that is being proposed
which is to end the subsidy regime will not solve this problem, it will only
lead to an unsustainable persistent hiking of pump price which in the context
of pervasive poverty (69% of the population: over 112 million citizens
according to government’s own figures) is merely a recipe for persistent and
permanent social conflicts!
This is further complicated by the
centrality of petroleum products to powering the economy as the dominant source
of energy; particularly in a context where electricity power generation from
the national grid is grossly inadequate and unreliable; and where businesses –
small, medium and large scale -- as well as households, have to provide their
own electricity through generating sets, the bulk of which are run on PMS.
Recent studies and reports on the cost of doing business in Nigeria from the
World Bank group to MAN (Manufacturers Association of Nigeria), and NACCIMA (Nigerian
Association of Chambers of Commerce, Industry, Mines and Agriculture),
all demonstrate that the single most significant contributor to the unbearably
and therefore uncompetitively high cost of doing business in Nigeria, is the
cost of generating one’s own electricity.
It is in this sense that the
differentiation for the purpose of justifying the thrust towards ending the
subsidy policy provided by the CBN governor is to be faulted. Sanusi Lamido
Sanusi, the CBN governor, had differentiated between subsidy on production (which
according to him is good for the economy) and subsidy on consumption (which is
bad for the economy), and under which he categorises the subsidy on petroleum
products. Given that over 80% of the electricity required for businesses and
households is self generated through the use of generators, the overwhelming
majority of which (particularly for small and medium scale enterprises) are run
on PMS. Premium Motor Spirit has become a decisive factor of production, and
therefore a subsidy on it is not a subsidy on consumption, it is on the
contrary in the Nigerian situation, a subsidy on production.
• However the
additional root cause of the crisis and perhaps a major root cause of the
gargantuan corruption in the sector is the “guestimate” nature of determining
the actual Daily Consumption Rate (DCR) for PMS, as well as the actual Daily
Production Rate (DPR) for PMS from the domestic refineries. Accurately
determining these two rates (and this is possible with available technology,
and requires no rocket science), will enable a precise determination actual quantity
of PMS to be imported daily.
The various probes have now revealed
that all through 2011 the country was importing and paid for 59 million liters
of PMS per day; however because of the January Uprising, since February the
average daily import quantity for PMS has been 40.9 million liters per day; and
according to PPPRA, this figure even dropped to 35 million liters per day in
September. It is in the inability to accurately determine, plan and work with
these rates that provides the opportunity for the collaborative mind boggling
looting of the treasury now being perpetrated and perpetuated by the marketers
and government and industry officials! It should also not be forgotten that
these aforementioned stakeholders are the constituent members of the infamous
Cabal; and it is this composition of the cabal that makes this regime a
government of the cabal, by the cabal, for the cabal: a kleptocratic lootocracy
and or cabalocracy! Why is it so impossible to determine these rates? Is this
because government personnel reaching to its highest levels are beneficiaries
of the consequent pillage of the treasury?
• Just in case I am
going to be deliberately misinterpreted by some, let me restate very clearly
here that the fundamental cause, spawning these other secondary causes, stems
from the fact that the nation does not have, and forces are working strenuously
to prevent it acquiring adequate domestic refining capacity! Nigeria is the
only exception among OPEC members, whereby the relationship between domestic
refining capacities versus import requirement for refined products weighs
heavily in favour of the later.
The country needs to acquire adequate (somewhere
between 80% to 100%) domestic refining capacity for petroleum products, and
perhaps even become an exporter of these products, becoming for instance a net
supplier for the ECOWAS region. This is not only feasible; it is a feat that
can be achieved within 24 to 36 months by a serious patriotic and nationalistic
government and ruling class! This can be achieved through a strategic framework
that puts the nation first, and combines public and private sector investment
in the refining subsector of the petroleum industry. Money saved through
plugging the loopholes in the determination of DCR and DPR and from the excess
crude account, as well as from private investors can conveniently finance implementation
of such a process that will ensure availability, accessibility and
affordability of the products, while ending the waste and rot in the system.
However, perhaps, it is for this same reason that this government is not taking
this as a serious option.
The offer to negotiate a framework
through which this can be achieved was on the table during the January
Uprising! It was one of the major demands of the Labour Civil Society Coalition
(NLC, TUC, JAF & UAD); a well as of the much broader January/Occupy Nigeria
Coalition! What is more, it was presented as a cornerstone of the demands of
the citizens during the negotiations, with an offer to have a 90 day
negotiating period to determine the strategic framework of such a policy
thrust, and put in place a mutually agreed mechanism for realising the
objectives of the new policy.
We were convinced then and now, that
this could have been achieved within 2 to 3 years, and that this could have
been done without any increases in fuel prices over the course of those 3
years, if the avenues for waste, leakage and corruption were not only plugged,
but culprits identified and punished. The regime was however not interested in
this solution then, and everything and every step it has since taken, is an
indication that it continues not to be interested in taking this step. Its only
solution appears to be end subsidy, increase fuel prices, and let sleeping dogs
lie!
As we approach another January, the
first anniversary of the January Uprising, it became necessary, incumbent, even
obligatory to once again refocus the discussion on the issues and on the
reasons why this crisis has persisted and will continue to persist.
As you read this article, of the over
2.5 trillion naira suspected to have been looted in the subsidy scam in 2011,
only 232 billion naira (less than 10%) has been verified by the regime; and of
this only 29 billion (again just about 10% of verified theft) has been
recovered!
Amazingly, not a single successful
prosecution has taken place; and while some featherweight marketers have been
indicted, with some taken to court, no single official of government and its
many implicated agencies, including political appointees with political
responsibility, have been implicated or even tried! Yet, how could this scale
of economic crime and the sabotage and undermining of the country’s laws,
constitution, etc., have taken place without the knowledge and connivance, as
well as protection of government officials and personnel? Everything points to
an orchestrated attempt to sweep the whole thing under the proverbial carpet at
the most minimum of cost to the regime, and to continue with business as usual,
not minding the cost of these to both the economy and the well being and
welfare of citizens!
This is why it is ludicrous to find
regime members actually trying to claim credit as fighters of the cabal, while
at the same time trying to cast those of us who took action in January and
since then, as the ones being sponsored by the cabal! And this is the cabal,
which until our uprising, the regime was unable to neither expose nor take any
action against?
As the first anniversary of the January
Uprising approaches, it is important for us to realise that although we wrested
some gains from an unwilling regime; nevertheless, the fundamental issues are
still unaddressed, and our alertness is required, along with our preparedness
to take further actions.
It took the January Uprising to force
the issues out into the open; it will take another uprising to compel the
issues to be addressed.
Welcome to the Uprising Next Time.
Jaye Gaskia is National Convener
of the United Action For Democracy (UAD) which is part of the Labour Civil
Society Coalition.
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