Opinion: Parable of oil subsidy

Posted by admin Headlines, Oil Politics Sunday, January 22nd, 2012

WHILE President Goodluck Jonathan has continued to say that the government spends so much money on subsidising the oil consumption, the economic indices point to the contrary. Experts in the field of petroleum, civil societies and non-governmental organisations have given a concise analysis of how much crude is lifted, sold, and brought back for sale in Nigeria. The most recent one is that of Prof. Tam David-West, a former Petroleum Minister who analysed the final landing cost of petrol to be N30 per litre, challenging successive governments from that of IBB and Shonekan, to Obasanjo and Jonathan’s to make public their own figures if they were truly different. A truly sincere government would have done justice to this if they had nothing to hide.

It was widely reported in all Nigerian dailies late December 2011 that the accounts of the Nigerian National Petroleum Corporation had not been (externally) audited since 1999. What an aberration! So, nobody knows how much NNPC is making and how much it is paying into the government coffers. The National Assembly’s oversight function also recently revealed that NNPC had not made many oil receipt revenues payment into the Federal Government coffers. Is the President not supposed to look into all these “waste, fiction, and fraud?” – the exact words used by Tam David-West to describe the so-called oil subsidy.

We found ourselves in this pitiable and avoidable situation because a nation like Nigeria, regarded as the sixth largest oil producer in the world, relies on imported refined products for her local consumption. Jonathan has always emphasised his desire for development, which is a great vision. But one will expect that if he is sincere, the first priority would have been how to fix our four refineries and probably build new ones.

This becomes imperative because, as a PhD holder in Biological Sciences (fisheries), Mr. President should be conversant with high school Chemistry which teaches that the refining of crude oil via a process called fractional distillation into end products will yield no less than 85 different products, which include (but are not limited to) petroleum gas, naphtha/ligroin, gasoline, kerosene, automotive gas oil (diesel), lubrication oil, heavy gas, coke, asphalt, tars, and waxes, just to mention a few. All these products would, no doubt, form basic raw materials supply chain for many manufacturing companies, thereby generating employment for the teeming Nigerian youths. This is the greatest panacea for the Boko Haram and many youth unrest in different parts of the country.

Tam David-West signed the contract for the building of the fourth refinery in Port Harcourt in 1984, and it took about two and a half years to complete. With modern technology, the same venture should take about two years or less. According to Dan Etete, a refinery costs about $250m, while Nigeria reportedly spends average of $900m on fuel importation annually. What’s the justification?

Even with the moribund nature of our refineries, which we’re told are only functioning at 30 per cent capacity, if the four of them are functioning at full capacity, they will process 445,000 barrels per day. So, 30 per cent capacities combined means they will refine more crude. One barrel of crude, when fully refined, produces 42 gallons or 189 litres of petrol. So, 133,500 will give us 25.2 million litres. Our daily consumption rate was estimated to be about 35 million litres. Meaning, after the locally produced fuel even at the current dilapidated, moribund stage, all we need to supplement by importation is only 35-25.2 = 9.8 million litres. So, if there is any subsidy at all, this is the amount the government is supposed to subsidise.

Nigerians have been encouraged to swallow this bitter pill of alleged subsidy (‘alleged’ because it appears not to really exist), so that we could save for tomorrow. I quite agree with Mr. President on this. We should learn to save for the rainy day so the future generation can be grateful.

Ex-President Bill Clinton in his book, Back to Work: Why We Weed Smart Government for a Strong Economy, said America as a nation at its core is an idea — the idea that no matter who you are, and where you’re from, if you work hard and play by the rules, you’ll have the freedom and opportunity to pursue your own dreams and leave your kids a country where they can chase theirs.

I assume it is this kind of idea that informed Jonathan’s decision that as a nation, we should also begin to save and invest for the future. But I will like to know why, in Nigeria, it’s only the poor masses alone that should make the sacrifices, while the leaders (or rulers) should make none.

In India, Mahatma Gandhi led the people in protest against the British onslaught by refusing to wear British and other foreign made clothes. In his popular Swadeshi movements, they would wear only locally spurn fabrics because at that time, clothes were in tandem with colonialism, slavery and power. But he travailed with the people and they won.

Also, in 1930, the British enacted a law which made it a criminal offence for anyone to purchase or be in possession of any salt other than the one produced by the government monopoly. Gandhi led thousands of people on a 240-mile march to the sea, where he picked up a pinch of salt. This sparked large protests, and Gandhi was arrested and jailed by the British, but his people continued the protests, until the government salt works was taken over by the people.

In America today, as the nation goes through economic downturn, one of the tax laws passed just last December was Payroll Tax Cuts, which means the rich and higher income earners pay more tax than the middle income earners. Warren Buffet, one of the richest men in the world was the first to speak in support of the law before others followed suit. Same goes for the congress men and women. But in Nigeria, the reverse is the case.

The 2012 budget stipulated about N1bn for President’s and his deputy’s feeding. President Barack Obama, with the whole world’s responsibilities on his shoulders, has 15 secretaries (ministers), and he has just announced plans to have a leaner military that will still have the same potency of fighting terrorists. In contrast, Jonathan has 42 ministers. As small as Abuja is, it has a Minister of FCT and a Minister of State. Pray, what is the function of the chairman of FCT local government?

Let the renewal and sacrifice begin with our rulers.

FABUNMI wrote from Ada Drive, Staten Island, New York, NY. 10314, vide temilolusola@yahoo.comwp_posts