Wednesday, May 20, 2009

Fuel: Deregulated confusion

For some weeks now, Nigerians have been groaning under the yoke of severe fuel scarcity which rendered most major cities in the country prostrate. Socio-economic activities have been terribly hampered, manhours lost in endless queues for fuel, while cost of transportation and essential goods have also shot sky high.

Coming almost immediately after a four-day strike by petroleum tanker drivers in Lagos over seizure of their trucks by Lagos State Traffic Management Authority (LASTMA) for illegal parking, the current scarcity is a direct fallout of Federal Government’s deregulation policy of the downstream sector of the petroleum industry, with the concomitant withdrawal of subsidy.

To make matters worse, vandals struck at the major pipeline system (System B2) of the Pipeline and Products Marketing Company (PPMC) that moves products from the Atlas Cove to Mosinmi, Ejigbo, Ibadan, Ilorin and Ore. This reportedly reduced the capacity to move products by about 30 percent, and most cities were thus rendered supine.

At the very heart of the scarcity, however, is the shortfall in fuel importation due to the refusal of major marketers to bring in fresh cargoes. This is directly attributable to the stoppage of subsidy payment by the Federal Government since it announced its intention early this year to fully deregulate the sector. The marketers were thus being owed to the tune of hundreds of billions of naira.

As insentive and unpopular as the withdrawal of petroleum subsidy is, it is further condemnable that the government merely announced the policy, and did not enunciate its pros and cons. Both the nation and the marketers were put in a state of suspended animation as there were no proper guidelines on the deregulation policy. It was the ensuing confusion that led to the fuel scarcity of the past few weeks and its attendant privations.

We note that Minister of State for Petroleum, Mr. Odein Ajumogobia says a major chunk of the arrears of subsidy owed marketers had been paid as at last week, but as a matter of urgency, we urge the government not only to pay up the outstanding amount, but equally clarify its position on deregulation, with distinct guidelines. The marketers shunned importation because the Federal Government announced discontinuation of subsidy on fuel, but did not make its position on pump prices clear. Was fuel still to be sold at the regulated price of N65 per litre? That was a question left hanging in the air, which caused the current scarcity.

Equally, it is shameful and disgraceful that Nigeria continues to depend wholly on imported fuel. All the four refineries in the country are not functioning, while not much progress has been made in attracting private investors into building refineries. We urge that the four refineries either be privatized, or completely sold. Adequate incentives must also be given for investors who had been issued licences to run refineries.

Assurances last week by the Nigeria National Petroleum Corporation (NNPC) that the fuel scarcity would end within three days turned out to be a fluke, and could indeed never have been reality. NNPC imports only about 60% of the 32 million litres of fuel consumed in the nation daily, and there is, therefore, no way it can cope with demand. The shortfall must necessarily be augmented by the marketers, who are now left in a quandary by an ill communicated deregulation policy.

Chronic indecision and tardiness on crucial policies are, sadly, fast becoming hallmarks of this administration. For the sake of Nigerians exposed to untold hardship occasioned by scarcity of fuel, government must make up its mind what to do, and quickly too. Completely deregulate, remove subsidy, and show itself as the nemesis of the people, or reverse itself on the anti-people policy and let well be.
Already, Nigerians are stretched to the limit.

They provide their own power through electricity generators which run round the clock, generate their own water through boreholes, build roads in their own neighbourhood, and shoulder many other responsibilities of government. Now, they must buy fuel at astronomical prices due to no fault of theirs. If we must say the obvious, it was successive governments that ran down the refineries over the years, but it is the people now being made to bear the brunt.

Finetune the deregulation policy please, and let there be fuel. But then, full subsidy removal is not something the people deserve at a time like this, from a government that claims to respect their rights and which is out to serve them.