The Removal Of Oil Subsidy: A Challenge To A Nation

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Mr. Chairman, distinguished members of the Nigerian Union of Journalists and members of the public here present, it gives me pleasure to be here in your midst in Akure. This city once served as the political capital of our beloved old Ondo State and I have fond memories of it. Moreover, Akure has a prominent place in my earliest beginnings as a working citizen. It was here that I got my first job at Toyin Bookshop as a sixteen-year-old fresh out of secondary school. Although I was a bookseller for only a week, I left for a clerical job in the Ministry of Education also here in Akure. Since I am addressing fellow journalists, permit me to add that it is also in this city that I did one of the most investigative reporting of my career. The story, for those of you who may have been practicing then, was titled, “The Scandals of An Era”. It was about a wasteful project of Navy Captain Olabode George, military governor at the time of the then Ondo State. His regime is remembered today for the tasteless fountains built in markets and open squares without running water. The wheels of justice, they say, move slowly. More than two decades after this exposé, the central character in that Era of Scandal was convicted and jailed for thefts in another theatre of scandals, the Nigeria Ports Authority. But I digress.

As citizens, be you a journalist, doctor, lawyer or farmer, whatever your calling, you must at all times speak the truth to those in positions of authority. As journalists nothing will erode our hard earned reputation faster than to fall for anything, especially in a time like this when bootlickers abound like the sands on our unpaved roads. I am here today to speak on the current debate on the issue of oil subsidy. I will be upfront with my position, which I should like to preface with this poser by the English writer, George Eliot, “What do we live for if it is not to make life less difficult for others?” Before giving you the details of my own position and the position of most Nigerians who do not belong to the cabal holding us down and raping us, let me start with the official argument and logic trumpeted by the few who believe that there is an oil subsidy and that without its removal Nigeria will collapse.

President Jonathan is today trying very hard to convince Nigerians of the need for the removal of fuel subsidy. In fact, he has all but declared the ability to make the idea look attractive as the yardstick for measuring the performance of Ministers and Presidential aides who have seized every opportunity to tell us that it is in our best interest. You may want to ask why the Federal Government insists on selling the idea of subsidy removal when it is so clearly a case of trying to sell a refrigerator to an Eskimo. Well, government says it does not want to become broke by continuing to subsidize fuel. Petrol presently sells at N65 per litre but that is not the price of importing this essential product, the government says.

According to statistics from the Petroleum Products Pricing Regulatory Agency (PPRA) and the National Bureau of Statistics, to get petrol to Nigerian ports costs N117.74 and because Nigerian ports are grossly inefficient, an additional cost of N6.25 per litre is incurred. The petrol is usually stored at the ports; it is not transferred directly from the ships to the trucks and so the ports charge N3 for storage and an administrative cost of 15. There is a bridging fund of N3.95, and then dealers would add their margin of N1.75 per litre. The transporters add their own margin of N2.7 while filling stations in turn add a margin of N4.60. So, they argue, the cost of fuel at the petrol stations should be N138.19 per litre, (approximately N140). And because it is sold for N65.00, the Federal Government pays the shortfall of N75.00 or thereabout on every litre. This extra N75.00, called a subsidy, is what the government says will make Nigeria broke if it — that is, government — does not stop paying it (subsidy) forthwith.

On the average, Nigerians use 294,000 litres of fuel per day. The four refineries in the country which currently operate at 21 percent capacity provide 93,450 litres daily, which means that an additional 200,550 litres is imported to meet the domestic need. If you multiply this by the N75 so-called subsidy, it is no doubt a huge amount of money, running into over N15 million daily. You can only imagine what it will be if multiplied by the number of days in a month. On the surface, then, it presents a strong case and we all ought to agree with the Federal Government on the removal of the “subsidy.”

But is this the whole story, the true picture? It most certainly isn’t. We need to ask ourselves, has it always been like this? How did we get to the present sorry state of exporting crude and importing refined petrol? Even more important is the question, how will Nigerians fare if we have to buy fuel as from January at N140 per litre? What, in any case, is the purpose of government? Why do we enter into a social contract known as government, thereby entrusting some of our individual rights and freedoms to it, if not in the hope that government will exercise power as a trust to advance our collective freedoms and welfare, thereby making life better for us all?

Oil was first discovered in Nigeria in 1956 at Oloibiri in present day Bayelsa State. That is about 56 years ago, a few years before Jonathan was born. Why, many may want to ask, haven’t we been able to build and maintain fully functional refineries since then? Other oil producing countries, like Libya, refine their crude oil; Venezuela doesn’t export a drop of crude. Why does our country continue to export crude oil to countries that would refine and sell it back to us at higher prices? Is it because our leaders do not know that there is added value in refined oil? They certainly do know. Why then have they not been able to ensure that the existing refineries work or tried to build new ones? Is it because of the existence of a powerful cartel that profits from Nigeria’s continued underdevelopment , a cartel that the government openly or tacitly supports? Indeed, is it because key officials of past and present governments are part of this cartel? We can continue to ask questions, but I think Nigerians know most of the answers.

It is the same story in the power sector where billions upon billions of dollars have been spent without tangible results. On the contrary, the funds always seem to end up in private pockets and foreign bank accounts. In a matter of days, President Jonathan will give us a prized new year present. That, as you are all aware, will be the new price of N138.19 (approximately N140) per litre of petrol. This will be more than double the current price. What will be the implications for citizens and the economy? According to available statistics, Nigerians generally spend about 63.8 percent of their monthly income on food and about 4.2 percent on transportation. If petrol sells at N140, transport fares would definitely double to 8.4 percent of monthly income. Prices of food items would increase since increase in fuel prices means increase in the prices of virtually all goods and services. That means more than 63.8 percent of the monthly income would be spent on feeding. What then would be left for housing, electricity, hospital bills, and tuition fees, not to mention other cares, one of which is meeting the needs of the extended family? As you know, for every employed adult, there are legions of siblings, nephews, nieces, cousins and aged parents who look up to him or her, especially when our country has no social security scheme. And this is why we must put politics aside and commend the Ekiti State governor, Dr Kayode Fayemi, who has instituted a social security programme for the aged. At least, this will take some burden off their children or relations.

Now, what assurance do we have that once Jonathan removes the so-called subsidy landlords will not increase rents when they have families to feed too? PHCN, schools, hospitals and other employers might want to pay their workers more to enable them cope with the even higher cost of living sure to ensue. This, of course, would mean increased school fees, electricity tariff, hospital bills, etc. This means that many tenants will receive quit notices from landlords eager to defray their own cost of living. More children will drop out of school owing to their parents’ inability to pay their tuition fees. More of the sick will die at home or in hospitals because they are unable to afford hospital bills or medicines as food takes priority. After all, we must eat to stay alive; to keep body and soul together. More of the few industries still able to keep their factories open will lay off workers or completely shut down as the cost of fuelling generators makes manufacturing unprofitable. Many of you journalists may have to work without pay or become unemployed as the cost of running media houses becomes too big a burden on their proprietors. Needless to say, circulation which is already at a miserable level, would drop even more drastically because the disposable income of the citizenry will have shrunk to the point where only basic needs, such as garri and kerosene, can be afforded.

It is true that the Federal Government has promised to spend the money realized from the subsidy removal on mass food production, construction of roads, education and health services and also to increase the minimum wage. We have heard that story before. What would any increase in minimum wage amount to in the face of a hundred percent or more increment in prices of goods and services? What happens to those in the private sector? What if their employers refuse to increase wages? As we all know, all businesses run on diesel fuel in Nigeria. This means that a lot of small businesses might not be able to cope and they would fold up. This will throw millions more into unemployment market. Even big businesses will be forced to downsize, thereby increasing the already unacceptable rate of unemployment which government has put at about 21.1 percent, but which we all know may be three times higher.

President Jonathan states emphatically that a government must take a stand. But at what cost, Mr. President? High officials of government would definitely be able to afford fuel at N140, but what about the masses? Should they suffer for the inability of government to ensure that our refineries are fully operational? Should Nigerians be made to pay for the ineptitude of their leaders and the kleptomania of government functionaries? Is it a crime to be a citizen of a country that is abundantly blessed as Nigeria? Why do Nigerians have to continue to suffer for the lack of vision of their leaders?

At present, the four refineries in Nigeria operate at 21 percent of their total capacity and produce 93,450 litres per day. If they run at only 66 percent capacity, they would produce more than the 294,000 litres needed domestically. You may ask, “Why can’t government make the refineries fully operational? This is the question all concerned Nigerians should be asking the government. And we should demand an answer to it. Just last week, a Nigerian newspaper published on its front page the photograph of a new refinery in Niger Republic. The refinery is located next to our border post in Borno State. I challenge every one of you journalists present here today to go and find out who the investors behind this modern refinery are. I am willing to bet that other than the land on which it is built, you will discover that every pipe and bolt is paid for by Nigerians with our stolen resources. They will collect the so-called subsidy and then hop across the border to buy refined fuel and bring it home to sell to us. It is an open secret that across West and Central Africa are modern, functioning refineries owned by powerful Nigerians and that it is from these places they will bring the “unsubsidized” fuel to be sold to us at an unaffordable price as from January next year. But we must not let this happen. You may have heard the story of one of our former leaders who, while in office, built a refinery in Jamaica and fed it with free crude from Nigeria for almost three years before leaving office. He then imported and sold to us the refined fuel subsidized by our government, that is, with our collective resources. This is another story you may wish to investigate as part of your duty to hold government accountable.

The foregoing makes it clear why our refineries are not working, why we are unable to build new ones, and why we continue to talk of oil subsidy removal year after year. For the eight years Olusegun Obasanjo was in power as civilian President, he increased fuel prices about three or four times, all in the name of removing the so-called subsidy. Apparently, this subsidy is elastic and inexhaustible — the more you remove, the more it increases! Successive governments have failed to explain why the refineries have remained comatose despite the huge amounts of money that have been spent over the years on Turn Around Maintenance (TAM). Is it not shameful, ladies and gentlemen, that a nation with the enviable position of the sixth largest producer of oil has the dishonour of being one of the highest importers of petroleum products? As at October this year, the government is said to have spent over N1.3 trillion on subsidy when the budgeted amount was less than a half of that sum. In a sane country, the President would not be sitting pretty at his desk after wasting such a huge amount of unappropriated funds; he would instead be facing impeachment proceedings. But this is Nigeria where anything goes. So where have all the moneys spent on TAMs and “subsidy” gone? To the vaults of foreign banks, the acquisition of mansions in western capitals and sea side resorts, and the hundreds of private jets that are to be found at airports across the nation. When next you hear one big man asking another how his PJ is performing, know that the two are not talking about pyjamas — the mere night dress we all refer to by those initials — but about their exotic private jets, the Gulf Streams and other flying wonders most probably bought with subsidy funds.

The Removal Of Oil Subsidy: A Challenge To A Nation


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