Purporting to remove subsidy on refined petroleum products and deregulate the downstream sector of Nigeria’s petroleum and gas industry, President Muhammadu Buhari’s administration has recently increased the pump price of petrol from N145 to about N162 per litre, the second significant increase in four years, following a similar price hike from N87 to N145 in 2016. Going forward, the people of Nigeria, a major oil-producing country, are to pay for the refined petroleum products they consume at home at a rate to be determined by the price of crude oil in the international market. By this latest decision to remove subsidy from petrol and raise the price arbitrarily, President Buhari has,arguably, tainted whatever was left unbroken in the ruling APC’s promise of “Change” in the last five years of his administration.
With about two million barrels per day production capacity, Nigeria is the 15th largest oil producer in the world and currently the first in Africa. Beginning from 1957, when oil was first discovered in commercial quantity in the Niger Delta region, Nigeria made modest but steady progress as an emerging oil and gas powerhouse within the first three decades as an oil producer. Between 1965 and 1989, Nigeria rapidly expanded its oil and gas value chain-enabling infrastructure with the establishment of four refineries linked to 19 depots and pump stations through a massive network of 3,000 kilometres of pipelines across the country. This level of infrastructural development in its oil and gas industry at the time, though not adequate, nevertheless enabled Nigeria to substantially maximise the gains of being a major oil-producing country. The challenges of the inadequacy of Nigeria’s modest effort at oil and gas infrastructural development would become aggravated and more manifest in the next three decades, between 1990 and 2020, as a result of acute leadership failure, gross mismanagement and grand corruption in the Nigerian state.
Nowhere has the leadership failure, mismanagement and corruption of government manifested itself more in Nigeria’s oil and gas industry than in its inability to refine adequate petrol for the domestic consumption of its citizens. Between 1990 and 1999, successive military regimes in Nigeria invested very little or nothing in the expansion of Nigeria’s oil and gas value chain infrastructure to meet the challenges of a growing population’s energy needs. No new refineries were built and just as the turnaround maintenance of two refineries in Port Harcourt, one each in Warri and Kaduna, with combined refining capacity of 455,000 barrels of crude oil per day gulped billions of naira, the desired result was not achieved. With refineries not working at their full installed capacities, the government resorted to importation of refined products to augment the shortfall in domestic supply. As though in acknowledgement of its fundamental responsibility of providing energy security for its citizens, the government of Nigeria introduced a subsidy regime on imported petroleum products to reduce the financial burden of the consequences of their incompetence on the Nigerian people.
By 1999, when Nigeria transited from military to civil democratic rule, guided by the clique of “Washington Consensus” ideologues, the ruling PDP, in their 16 years in government, washed their hands off the means of economic production under the pretext of “government has no business in business” and transferred some of the most fundamental responsibility of government to the organised private sector. Through its privatization, commercialization and liberalization policies, previous PDP administration opted for a deregulated downstream sector and removal of all forms of subsidies on refined products, sale of critical national oil and gas infrastructure such as refineries to private entities and invitation to investors to establish private refineries that were guaranteed a pricing regime in Nigeria determined by international price of crude oil. However, the attempt to implement this toxic policy was stoutly resisted by Nigerians, the organized labour, led by then NLC president and now a chieftain of the ruling APC, Adams Oshiomhole, and a coalition of opposition parties and civil societies led by former opposition leader and current President of Nigeria, Buhari. Unfortunately, while the former PDP administrations grudgingly continued to pay subsidies on imported refined petroleum products, they neglected Nigeria’s refineries and allowed them to rot away while waiting for private sector investors to come and take up their responsibilities.
In the absence of adequate power supply to homes and industries as well as efficient and affordable public transport system in Nigeria, Nigerians have come to rely on petrol-powered source of alternative power and general logistics for their daily economic activities. Any increase in the price of what is undoubtedly Nigeria’s economic live wire is bound to have a hydra-headed effect of increase in prices of goods and services as a consequence of cost push inflation. For every kobo that is added to price of petrol, Nigerians are further pushed into deprivation, want and hunger because the resultant cost push inflation erodes whatever is left of their purchasing power and pushes more people below the poverty line. Therefore, Nigerians have over the years resisted increases in the price of the most important source of their socio-economic sustenance.
The high point of this collective resistance of the Nigerian people against the injurious neo-liberal policies of the PDP in the oil and gas industry was in 2012, when the President Goodluck Jonathan administration attempted to remove subsidy on refined petrol, which resulted in a hike in price from N65 to N129. The then opposition coalition and current ruling party, along with their civil society partners, mobilized Nigerians to occupy the streets of Lagos and Abuja in protest of the removal of subsidy and increase in price of petrol. In bowing to the wishes of the Nigerian people, the Jonathan administration restored subsidies on petrol in exchange for a marginal increase from N65 to N97.
President Buhari, who made huge political capital out of the subsidy removal misadventure of the Jonathan administration in 2012, chided his predecessor for inflicting hardship on Nigerians through a non-existent, fraudulent subsidy regime and promised to revamp Nigeria’s moribund refineries and make petrol available at an affordable price for the Nigerian people. Believing him to be a man of integrity, majority of Nigerians that were frustrated with the PDP-led Federal Government’s inability to provide energy security for its people voted in President Buhari of the APC to bring back the golden age of Nigeria’s oil and gas industry.
However, in what has become a familiar pattern of broken promises that are consistent with his character of dishonest integrity, President Buhari, without fulfilling his promise of revamping Nigeria’s refineries, shocked Nigerians when he unilaterally removed subsidies from petrol, which sent the price up from N85 to N145 within one year of his first term in 2016; the highest marginal increase in the history of the Fourth Republic. Within a brief period of one year, President Buhari succeeded in shoving down the throat of Nigerians the bitter pills of the very neo-liberal oil and gas policies they loathed so much and resisted with their very lives for 16 years. The recent upward revenue of the price of petrol from N145 to N162, which is a direct consequence of President Buhari’s deregulation and removal of subsidy, reads like a plot from the PDP neo-liberal economic playbook.
Contrary to the assertions by some neo-liberal pundits, subsidizing petrol, which is the live wire of Nigeria’s economy, is not subsidizing consumption but actually subsidizing production. Every serious country in the world, including the United States, China, Canada and Saudi Arabia, spends billions of dollars in subsidies for oil and gas production in their respective countries for the purposes of energy security for their citizens. By making already impoverished Nigerians to bear the financial burden of his failure of leadership, President Buhari’s change of promise from revamping Nigeria’s moribund refineries and construction of new ones to achieve self-sufficiency in refined products to continuous importation of petrol at prices to be determined by international market forces is a betrayal of the trust of millions of the Nigerian working class, urban and rural poor masses who defied all odds to vote out the PDP and vote him into power.