Fuel pricing, an endless crisis

THE discovery of oil, which heralded a better life for people in other places, has been a source of woes for the vast majority of Nigerians.  In the last 43 years, the price of petrol has been raised from a little less than nine kobo to the present N162.00 per litre in the name of subsidy withdrawal.   This is a ratio of 1: 1,800  which, otherwise expressed, amounts to 180,000  per cent increase.  What cannot but confound rational thinkers is that the higher the price of petrol the more has been the subsidy.  The fact of the matter is that the problem is not with the subsidy but with the competence level of those being repeatedly thrown up by circumstances to manage the country’s affairs.  The unwholesome situation is a direct consequence of lack of capacity to efficiently manage the bounty of nature.

Each time a higher fuel price is foisted on the people, the promise is that the subsidy removed will be used to provide the needs of the people in the different facets of national life.  It has, however, been all pain and no gain.  While subsidy removal has been going on for decades, the El Dorado promised the people has been a mirage.  When subsidy payment started, the government was augmenting the cost of petrol, kerosene and diesel oil. The prices of both kerosene and diesel oil have for long been left to market forces but there is nothing to show for the savings made from the subsidy withdrawn.  As a country in which electricity supply is most unreliable, the withdrawal of subsidy from diesel oil led to a steep rise in the cost of production which so many companies operating in the country found unbearable.  These companies had to close shop or relocate to other countries that are less endowed than Nigeria but had the good fortune of competent managers.

The storm clouds of another fuel price hike have been gathering for quite some time. Always at the forefront of the clamour are the wheeler-dealers who stand to benefit from the price increase.   There are also the political office holders because they live at the expense of the people and are thus immune from the hardship that higher fuel price inflicts on the hoi polloi.  It does not matter to them even if  a litre of petrol sells for N1.000.  At the time Nigeria had  thriving  vehicle assembly plants, so many ancillary  companies came into existence.  They were producing tyres, tubes, batteries, windshields and other components.  They all collapsed with the assembly plants and the job losses, direct and indirect, were in hundreds of thousands.  Unemployment has for long been and still remains a major problem in  Nigeria.  The painful fact is that nothing has been learnt and  nothing has been forgotten even with Nigeria as the global headquarters of poverty.   In the face of government’s failure to provide basic necessities, a substantial percentage of the population are struggling to make ends meet.   Most of the time, they rely on the generator powered with petrol to run their businesses..  Another price hike, particularly at  the price being contemplated will frustrate most of them out of business.  A government that has been promising to lift 100 million Nigerians out of poverty should strengthen their productive capacity instead of swelling the ranks of the jobless and the miserable.

Nigeria is the only major oil-producing country that imports refined petroleum products to meet its domestic requirements. It  also has the uniqueness of being the only member of the Organisation of Petroleum Exporting Countries (OPEC)  in this unenviable category.  It produces and sells its oil in raw form with no value added. There is nothing to show for the humongous amount of money spent on the repair and maintenance of its refineries which have remained moribund for decades.  For as long as Nigeria depends on importation, fuel price will continue to be an issue.  Fuel accounts for a substantial percentage of Nigeria’s imports bill and constitutes a huge drain on its foreign reserve.  The cost of transporting crude oil from Nigeria to foreign countries, the cost of transporting refined products back to Nigeria,  port charges and various duties in Nigeria and wherever the oil is refined, are among avoidable expenses that account for the high landing cost of fuel.  When the ever-present Nigerian factor – corruption – is added to these expenses, the pump price of petrol cannot but be a crushing burden on the populace – the victims of wilful mismanagement.

As a matter of fact, the so-called subsidy is a misnomer in the Nigerian context.  It is an assuagement for utter incompetence and unfathomable corruption.    Apart from the constant and hectoring voice of the IMF, there are Nigerians who see fuel subsidy as a further indulgence of a pampered citizenry because they have chosen to ignore the glaring facts of the Nigerian situation in which a tiny clique lives on the state like leeches, feeding fat on the systemic rot  in which nothing works.  It is visible to the blind and audible to the deaf that that without self-sufficiency in refined petroleum products, the pricing of petroleum products will be an intractable problem and a perpetual source of crisis.

• Olatoye, a veteran journalist, lives in Ibadan

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