The recent total deregulation of the downstream petroleum sector by this clueless and anti-people government amounts to nothing but deregulating the already miserable lives of Nigerians. No government can be more insensate and insensitive to the plight of the already overburdened common man and common woman in Nigeria. On the three key indices of governance by President Muhammadu Buhari when he campaigned for the office of President in 2014-2015, he has failed, abysmally, on them all, economy, security and anti-corruption. We shall analyse these areas.
What is deregulation?
Deregulation of the petroleum sector simply means that the government will no longer be making petroleum products available to the public, but will now allow its price to be determined by the market forces of demand and supply.
Deregulation in some countries
Deregulation policy has been embraced by many countries across the world, such as Peru, Argentina, Philippines, Canada, USA, Pakistan, Mexico, Thailand and Venezuela. These countries have thereby systematically dismantled their state-owned oil companies in favour of private sector participation.
Advantages and disadvantages of full deregulation
Before this clueless government besieges us with inanities and cheap economics as regards why total deregulation is necessary, let me quickly inform it that every Tom, Dick and Harry already knows the benefits of total deregulation. It is so trite and elementary that it is no rocket science.
Total deregulation enables the private sector to drive petroleum policy by establishing and operating refineries, refining jetties and depots, importing and exporting petroleum products and converting crude oil to refined and petrochemical products, finer chemicals, gas treatment, as well as transporting and marketing the products.
Why Nigerians are angry
What Nigerians are angry at is the bare-faced hypocrisy of this government, whose major actors and actresses literally bayed for the blood of President Goodluck Jonathan in January 2012 for daring to remove subsidy and jerking up petroleum price to N141 per litre. Even after reducing it to N97, they conspired with some civil society organisations (CSOs), the organised labour, “Occupy Nigeria” group, etc, from about 2nd to 12th January, 2012, to fight Jonathan. Many genuine and fake emergency rights activists and historical revisionists were also recruited. They grounded Nigeria and forced Jonathan out of power. From Abuja, Minna, Lagos (especially Ojota), Ilorin, Ibadan, Lokoja to Kano, Nasarawa and Asaba, Nigeria’s government was completely shut down. There was mass hysteria, anger, arson, tears, sorrow and blood, forcing Jonathan to beat a hasty retreat. Nigerians are today more angry because the government of the same dramatis personae has conspired to exacerbate their pains and pangs through the insensate and insensitive timing of the deregulation. They are angry that it is doing so at a time when other decent countries of the world are giving succour to their citizens with palliatives, and cushioning the searing effect of the COVID-19 pandemic.
Nations across the world are providing social welfare, subsidising essential goods and products, pumping money into the economy, giving free rents, food, medicaments, necessaries, tax holidays, mortgages, recesses, etc, to their citizens. In Nigeria, the reverse is the case.
Fact versus fiction
So, before the government cheaply sermonises that deregulation will provide employment to millions of Nigerians directly and indirectly, we must remind it that the hike in petroleum prices, which has gone to over N180 in some cities, will and has, indeed, already increased inflation and worsened the living standard of already poor Nigerians.
Before the government thumps its chest and gloats over deregulation as attracting new foreign direct investment in the petroleum industry, expanding downstream sector, increasing competition and improving the refineries, pipelines, trucks, depots and filling stations, and ultimately leading to cheaper prices, let me tell the same government that it is the common man and woman that bear the full brunt at the end of the day. Prices of commodities have simply tripled, thus, increasing their woes, miseries and harsh living environment.
Before this directionless government inundates us with the recycled story that it is the “big men and women,” corrupt politicians and roguish importers who have been enjoying regulation and subsidy and so must be stopped, let me tell the same government that these same classes of people have now increased geometrically under the same government. Where mere rodents and millipedes crawled in the sector before now, they have, since 2015, metamorphosed into deadly vipers, vampires, rattle snakes and blood-suckers.
Before this government pontificates that deregulation will ultimately be beneficial to the Nigerian people, let me inform the same government that price regulation (in spite of its obvious disadvantages) in a country like Nigeria, which has a mono-product, has dire consequences and negative multiplier effects on the socio-economic and political life of already impoverished Nigerians, whose lives of despondency have continually been played like a yoyo on the political chessboard of guinea-pig Nigerians. Let the government know that, under Section 14 (1) (b) of the 1999 Constitution, “the security and welfare of the people shall be the primary purpose of government”.
The government must be told that “sovereignty belongs to the people of Nigeria from whom government through this Constitution derives all its powers and authority” (Section 14 (1) (a)).
Let the government know that it has no fiscal discipline and that price stability is required in a “disarticulate economy” (as put by the late Prof. Claude Ake), where Nigeria produces goods she cannot consume (crude oil) and consumes goods she cannot produce (petrol). Let this compassless government know that total removal of petroleum subsidy is a volatile and politically sensitive matter in a developing country like Nigeria, which is replete with massive corruption, religious and ethnic cleavages, low per capita income on a non-living wage, high unemployment rate, infrastructural decay, ignorance, superstition, zero welfare system, and high population growth. Here comes the Malthusian Theory of Population.
According to the great economist, Thomas Robert Malthus, who propounded the theory, there must be a way to establish a balance between population growth and food supply, through preventive positive checks. The theory is based on the reality of “exponential population and arithmetic food supply growth.”
Let this government be reminded that deregulation means further devaluation of the already weakened naira, which now exchanges for between N450 and N480 per dollar, whereas it exchanged for between N157.4 to N158.7 to the dollar in 2012, when President Jonathan deregulated, and Nigerians immediately beat him back with bare knuckles. Remind this propagandist government that it is under it that a snake allegedly swallowed N36 million; that we had an alleged corrupt grass-cutting SGF (N544.1 million); that we had a former head of the Pension Fund who allegedly fraudulently “chopped” over N100 billion pension fund; where N378 billion ($1.05m) allegedly grew wings and flew away from NNPC’s coffers; where ICPC uncovered alleged N18.62 billion padding scam by some MDAs; and where contractors in CBN and MDAs allegedly inflated contracts to the tune of N26.86 billion, among others.
Let this government learn that it is severely and gravely contradicting itself by rejecting the much overdue restructuring of Nigeria, while at the same time embracing wholesome deregulation. The government does not appear to appreciate that deregulation must inevitably lead to restructuring, in which the oil-bearing states and communities will be positioned to control and manage their own God-given resources.
Let this government appreciate that no private investor, especially foreigners, will ever come and invest in a Nigerian economy that is “fantastically corrupt” (President Muhammadu Buhari’s own words); where there is sustained disobedience to court orders; where rule of law is observed more in breach than in adherence; and where the fundamental rights of the citizens are trampled upon with impunity.
Let this government first work hard to ensure passage of the decade-old Petroleum Industry Bill (PIB), which is geared towards encouraging investors and putting a stop to importation of petroleum products. The PIB is a bill meant to improve transparency in the oil sector, attract investors, stimulate growth, and increase government revenue. It is generally aimed at establishing a framework for the creation of commercially-oriented and profit-driven petroleum industry, to ensure value-addition and internationalization of the industry through effective governing institutions.
In 2011, nearly nine years ago, I had reacted to the NBA’s own reaction to President Jonathan’s then planned removal of petroleum subsidy. The NBA had argued that subsidy removal was good, but that the time was not ripe for it. I had waded in and argued as follows, on November 30, 2011, (an argument I have not seen any reason to depart from 9 years later):
“In jurisdictions where subsidy is removed, the infrastructure are in good shape, hospitals are in good shape and the roads, very good. There’s water, abundant health facilities and educational opportunities. Capacity building and employment opportunities are there. But, in the case of Nigeria, the common man is already bearing the brunt of impoverishment within the society. To remove fuel subsidy now is to further impoverish that common man…
“For us to remove the subsidy now, the common man will be trampled upon. So, the NBA is saying some of infrastructural facilities should be put in place before the subsidy is removed…
“In Nigeria, economic forces do not appear to obey or honour the Newtonian Law of motion. The law of motion propounded by Isaac Newton states that everything that goes up must come down. But, in Nigeria, when it goes up, it continues to go up, up and up…
“So, what the NBA is saying is that we agree that the oil subsidy would be removed, but phase it in a timeline of about seven years doing A, B, C and D; break the backbone of the cartel and build more refineries, remove corruption and leakages.
“Then begin to repair the existing refineries, licence more private people to build more refineries. After all, the Igbos were refining crude oil during the civil war. And they were using it to run their vehicles. So, what happened, 41 years after the end of the civil war in January 1970, that we cannot refine our oil?
“My argument is subsidising your products is a misnomer. A farmer does not subsidise his yam to be able to eat it. If we produce crude oil, we should be able to enjoy crude oil as a God-given gift, without having to pay the same rate, which obtains internationally, because it is an advantage that we have oil. We cannot live by the river and still wash out hands with spittle. But, from all indications, it appears that, at the end of the day, whether today or tomorrow, or five years’ time, there is no way we cannot deregulate this sector of the economy because that is the norm across the world. But, first, put in place facilities that will cushion the inevitable inconveniences and suffering that will emanate from subsidy removal.
“The government should also ensure it curbs corruption that has always beset the sector. Between 1981 and 1982 when I was a youth corper, I bought a small Subaru car, I was fuelling it with 20 kobo from Lagos to Agenebode. But, today, you need an average of about N10,000 to fuel the same car. The question is: Why has there been a geometrical increase in the prices of oil without a comparative geometrical increase in the comfort and living standards of the people?”
Five years later, I am vindicated. I now say, nine years later, I am today more vindicated.
Thought for the week
“Deregulation is the government code word for facilitating corporate fraud.”