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Politics Of Fuel Subsidy …Why Is Nigeria’s Pump Price Static
With all its beauty, one of the biggest disadvantages of democracy is the decision on an issue by a presumed majority that lacks the requisite knowledge to decide properly. In Nigeria, where, more than half the population is illiterate, it is very easy to politicize thorny issues as long as the gullible majority is manipulated against government.
In the past four or so years, the freedom of expression often enjoyed in a democracy remained high, with all manner of views and actions that should have earned more knowledgeable handling. But because virtually everything in Nigeria, within the past two or so years, has been politicised, rarely has a reasonable common-ground been achieved on matters of important national interest.
One of such issues was the highly political public protest against deregulation of the downstream sector of the petroleum industry. Fondly remembered as the takeover Lagos’ protest which saw Nollywood stars and top musicians daily entertaining the jobless and gullible citizenry for free, the message was that government intended to remove subsidy on petroleum products and how that would affect livelihoods and the common man in particular.
Even the literate few, who ought to educate the illiterate many on the advantages of deregulation, played on the gullibility of the masses and ended up demonising the government. In the end, the unions, over-night civil society groups and countless other make-believe lovers of the masses, arm-twisted government into fixing the pump price of fuel at N97.
That was in spite of the fact that government explained that fuel marketers were shortchanging the country, to such extent that required urgent deregulation as was done in the telecommunication sector. With such exercise, prices of petroleum products would be determined by market forces and not left static while government continues to fund the greed of independent marketers.
With such deregulation, prices of refined petroleum products, especially the pump price of fuel would have been all time low by now, since the cost of crude has fallen below $50 per barrel. But trust Nigerians. They like to win every bet, whether head or tail. They are now asking questions, albeit, belatedly why prices should not fall.
They are asking why prices of petroleum products should fall in the United States of America (USA) and even nearby South Africa and Uganda, while Nigeria’s remain static. They have forgotten that what the Nigerian government wanted to do was what the affected countries did long ago without any, ‘Save Our Country’ strike by anyone.
Today, they are the better for it, … the worse. So, why can’t the price of petrol fall as it did in other lands?
Firstly, what Nigeria exports predominantly is crude oil while, it imports refined petroleum products to augment the little produced by our ageing refineries. Essentially, marketers either buy the finished products or refine the crude in other lands where, due to deregulation, it is much cheaper to refine than do so in Nigeria.
Under the subsidy regime, government undertakes the transportation cost, including other handling and insurance charges, explains Director of Communications at the Petroleum Equalisation (Management) Fund, PE(M)F, Mr. Goddy Nnadi. He said even when the products arrive Nigeria, there are other factors that go into the process which eventually further increase the cost, adding: “someone has to pay for all that, and thus, your prices remaining where they are in spite of what we find in other societies.
“Basically, Nigeria imports refined products, so she pays the cost of the crude which has come down globally now, and she also pays for the refined products, including the transportation and the inefficiencies that crop up in the system.
“All these combined, do not give Nigerians the real price of the product.”
“Also, issues like large vessels bearing refined products being unable to get to the ports due to their sizes and markets having to use smaller vessels to bring the products, bring added cost which would have been borne by marketers, if the sector had been deregulated, but borne by government.
“Another is the familiar issue of pipeline vandalisation. With the state of such pipelines which ought to transfer crude to the refineries, other more expensive modes of transportation have to be explored. Essentially, these are extra costs, which are very unnecessary but also add-up to the final cost of the product.
“If these extra costs are removed, then a reduction in prices of petroleum products will be feasible,” Nnadi explained.
The alternatives are to make local refineries work optimally and also encourage establishment of private refineries.
Unlike Nigeria’s refineries which are mundane and too capital-intensive to maintain and run, there are more modern refineries that are cost-effective that are used in other countries where public policies are friendly.
This, perhaps, accounts for why none of the many granted licenses to establish private refineries has taken off, while Nigeria’s existing refineries continue to operate below capacity.
To encourage the kind of competition that force down prices in the tele-communication sector, experts insist that deregulation is the solution. In such a case, price of petroleum products would be determined by market forces, like the fall in price of crude oil, determining price of fuel in South Africa and Europe.
Under such scenario, government needs not pick bills of marketers who, due to their inadequacies, incur more expenses in the name of subsidy.
Instead, what government ordinarily spends on such marketers could go into updating existing refineries or even building new ones, and through such competitive environment force down prices of products.
A situation whereby, Nigeria imports refined products at exorbitant prices while, her crude’s price slums below $50 per barrel, cannot automatically affect the pump price of petroleum products.
Rivers Chairman of the Trade Union Congress (TUC), Comrade Chika Onuegbu captured the scenario aptly when he said the fall in crude oil price did not automatically translate into fall in the pump price of petrol because in Nigeria, prices are fixed.
This means, even if the cost of refining petroleum products rises beyond N100, Nigerians must continue to pay N97, because government pays marketers the difference, while the fall in crude becomes a disadvantage because government’s earnings, sourced from the sale of crude to pay for extra cost of refined products, would not be available.
This, in short is the layman’s explanation to an otherwise thorny national issue. Many educated Nigerians knew all these but would rather incite labour and the jobless many against any form of positive reforms. They would rather repeat the familiar refrain, ‘government wants to remove fuel subsidy’ and will provide a long list of countries subsidizing the product for their citizens.
They would argue why Nigeria should import fuel when there are three refineries.
Basically, the orchestrated protests against deregulation were not against subsidy removal but against the Federal Government, mainly for cheap political gains. But here we are.
One expects those who pioneered the Lagos protests against deregulation to speak now against the static fuel price even when the price of crude is on a free fall. One expects political parties to articulate better alternatives to the present regime of fixing prices of petroleum products, but that’s what the parties are reluctant to dwell on.
So, here we are left behind by time and conventions of a trade in which, we ought to be major players, still wandering in the wilderness, with many more questions than answers.
My Agony is that those over-night socio-political elite, who, riding on the large crest of Freedom of Expression, manipulated the gullible citizenry to believe that government was indeed an uncaring demon, for insisting on deregulation, are not in a hurry to comment on the state of the industry, and why Nigerians are yet to experience any fall in pump price of petroleum products.
Perhaps, now is the time to champion the total removal of fuel subsidy and let the market stabilize on its own!
But in spite of all the challenges catalogued above, the Federal Government last night slashed petrol pump price from N97 to N87 per litre.
Soye Wilson Jamabo
Okonjo-Iweala, Finance Minister and Allison Madueke, Petroleum Minister
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DEPLOY YOUR CAPACITY, TECHNICAL KNOWHOW TO REVITALISE SONGHAI FARMS, FUBARA TELLS TASK FORCE
Rivers State Governor, Sir Siminalayi Fubara, has said that diversifying the economy of the State has become inevitable because of the need to solve the problem of food shortages while also providing jobs for the teeming unemployed youths.
These, he said, are the reasons why great care has been taken to critically look at the prospects of revitalising the Songhai Integrated Farms, which is located in Bunu Tai, in Tai Local Government Area of the State.
Governor Fubara insisted that if the problem associated with food shortages is tackled with good intent and purpose, about 40 to 50 percent of current problems of economic hardship plaguing the country and its people would have been solved.
Governor Fubara made the assertion while inaugurating the Chairman, Mr Biedima Oliver, and members of the task force saddled with the responsibility of supervising the revitalization of Songhai Integrated Farms by its partners: Vitalcrop Ventures Limited and Imagine Adama Limited, at Government House in Port Harcourt, yesterday.
Other members of the task force included, the Rivers State Commissioner for Agriculture, Engr Victor Kii; Commissioner for Finance, Barrister Emmanuel Frank-Fubara; Dr Ayebaesin Beredugo; and Mr Maurice Ogolo.
The Governor explained that it took him time to approve the constitution of the task force being inaugurated because of the ugly experience with the previous group that shown such interest.
Governor Fubara stated that a process was initiated and driven halfway into the handing over of Songhai Farms on concession to an interested partner who latter showed a total lack of the needed capacity to undertake such task.
He said, “As a matter of fact, if few of you could remember, we even conceded the place to an investor who came in after he had made his presentation, and we, believing that he has the capacity, we said okay to him, and we had already signed up.
“But something happened. He came back to tell us that he wanted us to give him a N5billion bank guarantee. We then asked him, why? If we have the N5billion, why do we need you to come and even revitalize Songhai Farms? We would have put that N5billion there ourselves. For that reason, we cancelled that arrangement.”
Governor Fubara said now that two separate companies have come together to indicate interest and given the assurance of having the needed capacity to drive the process, he is delighted to see them meeting that expectation.
Governor Fubara pointed to the expectation of the people who want to see the Songhai Farms back on stream on a sustainable basis.
That expectation, he insisted, is also what his administration wants to see actualised within its lifespan.
He noted, “We want to see food sufficiency, because we know when Songhai Farms comes on board, there will be food, which is one of the problems we are having in this country. If we are able to tackle the issue of food, 40 to 50 percent of our problem will be solved.”
Governor Fubara also stated that although he believes in the presentation made by the group and has taken their assurance to heart, but warned that he would not tolerate a repeat of what happened before.
The Governor said, “I hope your story will not be (end) halfway too. I hope you have the capacity and all the technical knowhow to handle it. It is not when we start now, after we had finished inaugurating the task force, you will come back to tell us that you need $2million. If we have $2million, we won’t need you. We will invest it by ourselves.”
Governor Fubara, however, praised the capacity of the Chairman of the task force, Biedima Oliver, saying that incidentally, he was one of the personnel that convinced the then administration to develop the Songhai Farms, and had worked with the Rivers State Sustainable Development Agency (RSSDA) to manage the project.
He said, “He knows and understands the workings of Songhai, and now that we are making you the chairman of the task force, we want to believe that you will make that place come back to life.
“I don’t have any doubt in your capacity. A few things you’ve touched, you turned them to gold. Please, bring it back to what we used to see in Songhai. Bring it back with the help of your committee.”
Governor Fubara assured that his administration will remain committed to providing all the necessary support that they may require to make their assignment a success.
He added, “So, I hereby inaugurate you. Your task is very simple: Do everything within your powers and with our support to make sure that Songhai becomes operational to the benefit, not just the people of Tai, but to the entire Rivers State and Nigeria as a whole”.
In his acceptance speech, the Chairman of the Task Force to Supervise the Revitalization of Songhai Farms with Vitalcrop Ventures Limited and Imagine Adama Limited, Mr. Biedima Oliver, expressed appreciation to Governor Fubara for the opportunity and confidence reposed in them to revive Songhai Farms.
Mr. Oliver assured that they will deliver the expected goal on Songhai Farms, and doing so on time and on target so that the good people of Rivers State can eventually be happy and also benefit from the huge investment.
Rivers State Governor, Sir Siminalayi Fubara, has declared that all the policies and programmes of his administration are tailored towards the protection of interest of Rivers people, especially the youths.
This, he said, is borne out of the importance his administration attaches to youths’ development and empowerment as leaders of tomorrow.
Fubara, according to a statement by his Chief Press Secretary, Nelson Chukwudi, disclosed this when he received the youths of Emohua Local Government Area under the auspices of “Emohua Youths For SIM” on solidarity visit to Government House, Port Harcourt, last Friday.
He said that his administration has put in place modalities that will boost the livelihoods and well-being of Rivers citizens, which youths of Emohua will also benefit when they materialise.
The governor, who spoke through the Rivers State Head of Service, Dr. George Nwaeke, pointed out that the recently awarded Elele-Omudiaga-Egbeda-Ubimini-Ikiri-Omoku Road, the ongoing Emohua-Kalabari Road, reinstatement of illegally sacked workers of Emohua Local Government Area and the approval for electrification of the area, are part of deliberate measures to open up the area to make life conducive and more meaningful for the people.
According to him, “Everything about the governor is putting the interest of Rivers State first. He is looking at and taking action on those things that we need to do to restart the wheels of progress in Rivers State.
“There are many things the governor has planned and is already doing that will boost the life and welfare of every citizen of Rivers State, but most importantly the youths.
“Growing up, I learnt that Egbeda is one of the biggest communities in the whole of Ikwerre, and it’s predominantly an agrarian community. They have food in Egbeda, they have food in Ubimini, they have food in Omudiaga and other natural resources. The whole world is tilting to agriculture, and this is the way to go.
“The Elele-Umudioga-Egbeda-Ubimini-Omoku road, when completed, will open up the area for real development. Your food and everything you produce there will now have value, they will no longer be thrown away. In all these, you the youths are going to be the utmost beneficiaries.”
He added, “Same will be applicable to the Emohua-Kalabari Road which will also, trigger development in the area, and you will be the greatest beneficiaries. When the LGA is also electrified, you will be having 24 or 20 hours of electricity, and those things the youths can do with electricity, you can stay at home and create wealth for yourself and children.
“All the totality of what the governor is doing, when they are completed, or even as some are completed now, the youths are going to be utmost beneficiaries.”
While acknowledging that youths are the true leaders of tomorrow and any government that fails to carry them along in the scheme of things is doomed to fail, the governor assured them of his administration’s commitment to always address issues concerning youths and ensure that they are part of his government.
He commended the youths for toeing the path of truth by identifying with his administration, urging them to sustain the tempo and shun evil, as his government will ensure that the trend whereby politicians turn youths to beggars are over.
He said, “Youths are, indeed, the leaders of tomorrow. The time of youth is a very important time. It a time that your parents or whoever is your leader at that time have to make the greatest investment in you. And any Government that decides to only carry the elderly, chiefs aling and abandon the youths is bound to fail,” he asserted.
“But I am happy that Governor Fubara has concentrated his energy on everything that will benefit the society, especially the youths.
“And based on these, I want to thank you for recognising what is good and calling it good, for shunning what is evil, for saying the Governor is standing for you.
“Let me tell you, you are on the right direction. Let me tell you again, Rivers State is the bride of Nigeria. The whole Nigeria is looking at what will happen here. As they look here and see you standing on the path of truth, this is a very important step that you have taken to right all the wrongs of the past, to make Rivers State stand on the tripod of justice, peace and security. That is what we are going to gain through the governor, taking all the wise actions that he has already initiated.
“The projects the governor is embarking on are meant to prepare nets for the youths to fish and put food on their table, hence you should continue to follow him.
“The SIMplified Movement brought upon by the governor will ensure that Rivers youths stop the habit of going to bow down before politicians, pledging loyalty before they can eat.”
Earlier, spokesman for the Emohua Youths for SIM, Comrade Ovamale O. Ovamale, had said that the visit by youths from the 14 political wards in Emohua Local Government Area was to thank the governor for the award of the Elele-Omudiaga-Egbeda-Ubimini-Ikiri-Omoku road, the approval for electrification of the area and reinstatement of sacked workers of Emohua Local Government Council, of which the youths were mostly affected.
According to him, “Siminalayi Fubara of recent has given Emohua Local Government road that links Elele to Omoku, which comprises over four communities in the local government.”
“Emohua Local Government has also been in darkness for eight years. No community in the local government that has light. But, of recent, because of the passion and love the governor has for the people of Emohua, he has approved the electrification of the local government.
“Also, the illegal sack of Emohua Local Government workers, for which the youths were mostly affected and without the approval of the Local Government Service Commission, the governor, in his compassionate nature, has reinstated them, and that is why we said we must come and thank His Excellency”, he said.
Rivers State Governor, Sir Siminalayi Fubara, has assured that his administration will collaborate and continue to consult widely in delivering a liberated State experiencing enduring peace.
Fubara said, in doing so, he would not operate as a dictator but as a member of a team that has the best interest of the State at heart and determined to leave a lasting legacy that can be celebrated.
The governor spoke during the formal presentation of Certificate of Recognition and Staff of Office to the Amanyanabo of Okochiri Kingdom, King Ateke Michael Tom, as first class tradition ruler, at Government House in Port Harcourt, yesterday.
Fubara stated that, during the Sixth State Executive Council meeting, N80.8billion was approved with 50 percent contract value paid already as the Government awarded the construction of the Elele-Egbeda-Omoku Road.
He said the project will be funded from the savings from Internally Generated Revenue (IGR) to underscore his administration’s prudence without also borrowing to complete the project.
“We are at a crossroad in our State where we all need to stand for what is right. It happens once in a life time. So, for now, be one of those people that will be in the course to liberate and free our dear State.
“And I know strongly that having the support of a peace-loving Amanyanabo of Okochiri Kingdom, having the support of the wonderful Council of Chiefs, having the support of the great people of Rivers State, we will bring peace in our State. We will do those things that are right to develop our State.
“We will continue to consult. We will not act as dictators. We will act as people who know that one day, we will leave, and when we leave, the way we have acted will speak for us. We will not force people to talk good about us. Our legacy will be a signature for how we led”, the governor said.
Fubara explained that he acted within the ambit of the law to upgrade the traditional stool upon which King Ateke Tom sits in recognition of his efforts in promoting peace in Okrika, and indeed, the State, and urged him to continue to do justice to everyone.
In his speech, Commissioner for Chieftaincy and Community Affairs, Hon Charles Amadi, congratulated King Ateke Tom for being formally presented with the Certificate of Recognition and Staff of Office as first class traditional ruler.
Also speaking, former Transport Minister, Chief Abiye Sekibo, thanked the governor for fulfilling his promise of upgrading the traditional stool of Okochiri Kingdom, and pledged the support of Kirike Se people to his administration.