USA Africa Dialogue Series - SUNDAY MUSINGS: On the Matter of the Bottom Line Issue of the Fuel Subsidy Crisis {Bolaji Aluko}

SUNDAY MUSINGS: On the Matter of the Bottom Line Issue of the Fuel Subsidy Crisis 

May 6, 2012

My People:

Yes, every day now in the Nigerian newspapers, I read advertorials of strenuous denials - by oil companies/marketers and government agencies and individuals -  of accusations of fraud and corruption leveled against them in the recent Fuel Subsidy probe of the House of Representatives.  In fact, the House is in effect pilloried daily as being incompetent and with an agenda.   I am surprised that even  government parastatals seem to have no qualm in lambasting a House that is the Representative of the People, that has constitutional oversight,  and that approves their budgets.  In my thirty-something years living in the US, I had NEVER read of government agencies so ABUSE their Legislative Houses, which in general they hold in official awe.  If there is indeed criticism of the House, it should at least be done with great respect by these government parastatals.

I have in fact taken interest in cutting all the advertorials out and archiving them.   Many of the denials are quite convincing, and I have "secretly" begun to wonder: did the House do a thorough job or not?  Was it hasty in publishing some names of companies and accusations against them?   Should some of these companies not be re-called - maybe by the Senate - to explain their cases? If a company does not publish a denial - and threaten loudly to sue the House for LIBEL (abi na SLANDER sef) -  does it mean it has pleaded guilty to the charge?  Is that why we are seeing a rash of such advertorials? Is this now turning into a "sterile controversy" waiting to "blow over?"

And so on....

But a point suddenly hit me which is the bottom line to all of this fiasco, and made by the Editorial "Rally for Probity":   

                         "a subsidy budget of N240 billion yearly had spiralled to N1.3 trillion in one year alone."

Let us assume - and it is a big assumption - that there was absolutely no fraud, and that all the oil consignments in question were indeed supplied when and to who due by the oil marketers and properly receipted.  After all, the oil marketers have NOT been accused of stealing checks from the CBN and issuing them to themselves, abi?  

SO WHO WERE IN CHARGE OF ENSURING that  A BUDGET on just one item alone  did not increase five-fold in one year?  Should those not have been:

   - the Budget Presenter: the Executive;

   - the Budget Approvers: the Legislature;

   - the Budget Monitors: the MOF, the OAGF,

   - the Budget Oversighters:  the CBN, the Auditor-General; the relevant Legislature oversight standing committees (who belatedly as an ad-hoc committee,  are out with their own verdict)

Yes, we should and indeed we must go after the private companies that TOOK ADVANTAGE of the extremely poor oversight of budget.  We might even demand the resignation of certain high government officials.  But the CENTRAL question that still must be tackled - and which sight must NOT be lost in all of this is,  because it is symptomatic of the approach to all other parts of the Budget, which is the grund norm of financial planning of a nation  - is:

                                 "a subsidy budget of N240 billion yearly spiralled to N1.3 trillion in one year alone."  

 or even equally bad one (hypothetical now):

 "a subsidy budget of N240 billion yearly was under-utilized to the tune of only N2.4 billion in one year alone."

I am yet to see a fundamental tackling of this issue, whether it is in education budget, or transportation, etc.    Granted that a budget is a guideline set into law, but by how much, for example, should a budget be exceeded without NEW authorization by the Legislature?  But how much (little) should it be over (under)-utilized:  if by (say) the first quarter, the rate of use is  more (less) than one-quarter of the total annual budget,  should there not be a reporting of such over (under)-utilization?  What role must civil society watchdogs be able to play to call attention to and use the courts to arrest the situation?  Who should get punished BY LAW if these indicators are not reported if and when due?

These, to my mind, are the most important questions coming out of this particular probe rather than so much emphasis on punishing the companies, a little emphasis on the government officials/facilitators and no emphasis at all on the process itself.  It is the RAMPANT ability to bust a budget that (in this instance at least) lent itself to such apparent fraud and corruption, whether it was an election year or not.

And there you have it.

Bolaji Aluko

FUEL SUBSIDY MAZE (adapted from NM hand-drawn graphics)

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http://www.thenationonlineng.net/2011/index.php/editorial/45573-rally-for-probity.html 

THE NATION

 

Rally for probity

By Editorial 

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Prof Wole Soyinka

Okonjo-Iweala, Alison-Madueke and Lamido Sanusi should resign for their roles in the subsidy fiasco

Prof Wole Soyinka's call for Nigerians to prepare for a massive demonstration against the massive subsidy scam, exposed by the House of Representatives probe report, will resonate well among many. But it would also serve as a sad reminder of the nationwide anti-subsidy removal strikes of January, which ended in an anti-climax, after five days of fervent national strike. 

But whatever the response to another round of protests, it is vital Nigerians regain their sense of outrage at insensitive policies by unconscionable policymakers – policies often based on voodoo statistics meant more to confound and confuse; so as to push down the people's throat bitter pills founded on nothing but cynical fear. A classical example was the attempt, on January 1, at "full deregulation" of the downstream petroleum sector; and jack up the pump price of petrol from N65 to N140 a litre.

The official line back then, before the January 1 rash attempt, was that the subsidy regime had veered off all financial reason and common sense. From a well-intentioned state cushion to make fuel available at reasonable pricing, it had become a cash haemorrhage that could well be fatal to the nation's economy. 

That was why, they claimed, a subsidy budget of N240 billion yearly had spiralled to N1.3 trillion in one year alone. If Nigeria was not to sink into irreversible financial doldrums, it was time to remove wholesale the so-called subsidy, shoot the fuel pump price of petrol to N140 (up from N65) and use the "savings" to construct roads, revamp transportation, fix health facilities and invest in education, among other   necessities, to cushion the short-term pains. In the long run, the government sweetly argued, market forces would have arrested the risen pump prices and shot them down to a tolerable level.

All the economic czars and czarinas of the Jonathan Presidency swore by their honour, acclaimed expertise and access to privileged "facts", to this claim, as they did a round of road shows called town hall meetings to sensitise Nigerians to the impending hike; and the market el Dorado to follow after the initial short pains. Ngozi Okonjo-Iweala, finance minister and coordinating minister for the economy, Diezani Alison-Madueke, petroleum minister, and Sanusi Lamido Sanusi, Central Bank of Nigeria (CBN) governor, all but swore that Nigeria would collapse if subsidy did not go. 

But even after the fiasco of the January 11-15 national strikes, and the partial roll-back of petrol pump price from N140 to N97 (but still N32 higher than the former N65 price), the government still hoped that it had brow-beaten the people enough to open the anti-subsidy window again by April, and revert to N140 per litre of petrol.

But then came the April 17 release of the report of the Farouk Lawan-chaired House of Representatives ad-hoc committee on fuel subsidy regime. That report exposed a free-for-all devilish bazaar for the so-called subsidy funds, with unconscionable high officials of state allegedly conspiring and colluding with free-wheeling hustlers to clean out the till. This organised robbery was computed into "facts" and sexed-up statistics, and passed off as "subsidy" veering out of control. 

It was these voodoo figures that the likes of Dr. Okonjo-Iweala, Mrs Alison-Madueke and Mallam Sanusi were swearing by. While Okonjo-Iweala was – and is still –coordinating minister for the economy and finance minister, and ought to have been sure of her figures; Alison-Madueke, as petroleum minister, was chairman of the Nigerian National Petroleum Corporation (NNPC) board and NNPC was central to the free-wheeling racketeering; and Sanusi was CBN governor, who presided over the government bank that released money!

But the not-so-told story was that the financial madness indeed had a purpose. It was an election year, and the ruling party probably pulled all the stops. There are enough trends to legitimately hold that the drain of the so-called subsidy funds was no more than illicit deductions from the public till for partisan electoral good. Now, what sort of leaders and officials would facilitate creaming off public funds to run private elections, and yet compute same figures, pass them as "subsidy costs" and slap them on long-suffering Nigerians to pick up, with threats of a collapsed economy hanging on their heads like the proverbial sword of Damocles?

To be sure, there are claims and counter-claims resulting from the April 17 release of the oil subsidy regime report. And like everything Nigerian, even the most glaring outrage is soon turned into a sterile controversy that the guilty always hopes would blow over. 

Even then, it is shocking that the trio of Okonjo-Iweala, Alison-Madueke and Sanusi are still at their beat, pretending everything is all right. A country with a sense of outrage would pronto have demanded their resignation and officials with a sense of honour would have obliged without being told, even if it was a temporary measure, pending full investigation of the matter.

That all those fingered in the scandal still sit pretty is why Nigerians must regain their sense of outrage, no matter how the "massive "protest Prof. Soyinka hinted of pans out. Let all those directly involved be thoroughly investigated, prosecuted and convicted. But before then, let those high officials of state who misled Nigerians on the subsidy issue be immediately flushed out. 

That is the only way to warn against future executive escapades at the people's expense.

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