-----Original Message-----
From: Kingsley Omose <kingsleyomose@gmail.com>
Date: Sun, 4 Dec 2011 21:50:55
To: kingsley Omose<kingsleyomose@yahoo.com>
Subject: Theater of Absurdities
The last two or more months since President Goodluck Ebele Jonathan
threw up to the Nigeria public the issue of removal or retention of
petrol subsidy for debate has brought out the good and bad in Nigerian
debating skills similar to what we witnessed when Ibrahim Babangida
raised the issue of whether take up the IMF loan in the 1980s.
But it has been in the public hearings conducted by the Senate
Committee on Petroleum Resources (Downstream) and the debate in the
House of Representatives, both on the issue of removal or retention of
petrol subsidy that we have seen and heard things on the issue that
are ridiculously unreasonable, unsound, or incongruous.
That these utterly or obviously senseless, illogical, or untrue;
contrary to all reason or common sense; laughably foolish or false:
absurd explanations that are associated with extremely poor reasoning,
the ridiculous, or nonsense have come from individuals and
institutions that should know better is all the more laughable.
In the midst of these things on the removal or retention of fuel
subsidies that are extremely unreasonable, so as to be foolish or not
taken seriously, or the state of being so, have however come some
glimmer of light that properly examined point the way to putting an
end to this debate and taking needful action.
The first absurdity is the motion by the House of Representatives
calling on President Goodluck Jonathan to retain the petrol subsidy
because of the hardship increase in the pump price of petrol will
bring on ordinary Nigerians, and to source funds from other sources to
finance other items in the 2012 budget other than from subsidy
savings.
This statement is absurd not only because the House of Representatives
is calling on the Federal Government to continue borrow money to
finance its budget deficit, but also because the House of
Representatives are pretending not to know that the budget deficit has
technically been removed based on the demands made by State Governors.
In the months of September and October 2011, State Governors have
refused NNPC and PPPRA from making deductions for fuel subsidy from
the Federation Account, a fact admitted by Governor Sule Lamido who
said: Officially as a matter of the law, the subsidy is gone. If you
look at our budget, the subsidy is gone but then the capacity to
actually say it is what is lacking.
The second absurdity occurred when Ngozi Okonjo-Iwela, the Minister of
Finance appeared before the Senate Joint Committee on Petroleum
Resources (Downstream) and was asked to explain the difference between
the amount earmarked for petrol subsidy in 2011 (N245.9billion) and
the amount spent so far (N1.34billion), and she said that the Ministry
of Petroleum Resources would be In a better position to explain that.
What our own Chancellor of the Exchequer or Secretary of the Treasury
is technically saying is that she is not in a position to explain how
over N1.1 trillion of unbudgeted expenses has been incurred by the
Ministry of Petroleum Resources, the Nigeria National Petroleum
Corporation, and the Petroleum Products Pricing and Regulatory Agency.
The third absurdity comes from Diezani Alison-Madueke, the Minister of
Petroleum Resources when she told the Senate committee that NNPC is
too big for Federal Government, is not subjected to the consolidated
fund of FG, and cannot depend on federal budgets because it runs very
capital intensive operations beyond what government can finance.
This mother of all absurdities has so many grave implications that the
mildest way I can put it is that the tail (NNPC) is the one wagging
the dog (Nigeria) inspite of the fact that NNPC is a statutory
creation that is subject to the Nigerian constitution, and inspite of
Dezani Alison-Madueke saying that NNPC functions largely like a
private (secret?) commercial enterprise.
The forth absurdity comes from Austin Oniwon, the managing director of
NNPC who could not supply ready answers to two questions by Senator.
Bukola Saraki: What is the average capacity utilization of the
refineries and what amount of PMS would the refineries give us for the
months of October, November and December?
My take on this is that when the managing director of NNPC does not
know the average capacity production of petrol by refineries under his
control or the quantity of petrol NNPC will produce between now and
December, how can he know what quantity of imported petrol is required
to augment local production?
When NNPC is supposedly the one taking 445, 000 barrels of crude oil a
day for local refining and no one knowing the exact quantity that is
refined while the remaining is supposedly exported and sold, how can
PPPRA, the agency that gives out petrol importation licenses to the 77
companies on its approved list know what quantity of petrol to import?
The fifth absurdity will have to be the release of the names of the 77
companies that are on the list of those given licenses by PPPRA to
import petroleum products in 2011, with the added revelation that the
number of companies involved in this milking of the cow has grown from
3 in 2006 to 77 in 2011.
That is why I am not amused by the Senate Joint Committee's surprise
that N600 billion was spent on petrol subsidy in 2010 with the amount
almost tripling to N1.5 trillion by the end of December 2011, as if
they are not aware that it will take more allocation of import
licenses to satisfy 77 companies.
Now that we know the companies benefiting from the monkey de work,
baboon de chop business called petrol subsidy, are we to continue with
fuel importation and enriching these companies or do we deregulate and
allow market forces to sanitize the business of fuel importation and
ultimately building of new refineries in Nigeria?
In the midst of all these absurdities, the most enlightening issue
that is indicative of what is to come when we finally come to terms
with the need to move beyond petrol subsidy removal is the statement
by Austin Oniwon that it cost between $4 and $5 to, depending on the
exchange rate, to locally refine a barrel of oil, which is equivalent
to 159 litres
Now that we know it costs NNPC, according to its managing director, N5
to produce a litre of petrol, it is clear that even when petrol is
sold at N65 per litre Nigerians are the ones subsidizing government
inefficiencies and that the additional N70 per litre being allegedly
spent by the Federal Government on imported petrol is subsidy for the
importers.
But as long as the local refineries are owned by Federal Government,
they will remain dysfunctional and we will continue importing petrol
and allegedly subsidizing it, and no private investor will build
refineries in such a regulated environment as they will not be able to
compete with NNPC and PPPRA.
MTN, AIRTEL, ETISALAT, GLO, Starcoms, Visaphone, Multilinks, MainOne,
Mobitel, and others would not be active players in the
telecommunications sector today but for the deregulation in that
sector, and neither will any private refinery be built in Nigeria as
long as Federal Government is the dominant player
As call rates have moved from per minute to per second billing, and
continue to fall drastically due to competition giving Nigerians a
wide range of options, so also the pump price of petrol will
eventually fall as competition and the wide range of options available
to Nigerians kick in.
The issue is not really the removal or retention of subsidy, but the
disengagement of Federal Government, NNPC and PPPRA from the petroleum
products sector and the elevation of the Department of Petroleum
Resources to the role of regulator like National Broadcasting
Commission and the National Communications Commission.
"We must be the change we want to see in the world." - Mahatma Gandhi
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