M.A. Johnson

Enduring fuel scarcity

by MA JOHNSON

February 6, 2018 | 1:11 am
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Since the 1990s, Nigerians have been experiencing fuel scarcity because all crude oil refineries in Kaduna, Warri and Port Harcourt are in bad shape. Even President Buhari, who, during his campaign, promised a new order in the petroleum industry in 2015 finds it challenging to make Nigerian refineries work. The President was reported to have stated recently that it is disgraceful that no Nigerian refinery performs optimally. But who is to ensure that all poor performing refineries are working? It is the Federal Government (FG).

In order to fulfil its promise, the FG plans a new refinery close to Niger Republic in addition to repairing old plants. The move is the latest after investors have shunned FG’s planned pipeline project from Kaduna refinery to Niger Republic. The FG is probably considering these options to boost availability of petroleum products as controversy trails huge funds spent on old plants in the past without optimal results. Nigerians are of the view that if refineries cannot work at optimal capacity, why the FG continues to repair them?

When the refineries were down, Nigeria had to start importing petroleum products. This requires huge capital in foreign exchange. As a result of the nation’s weak economy, analysts have argued that the FG cannot sustain importation of petroleum products alongside fuel subsidy.

Whether there is fuel subsidy or not, the country continues to import petroleum products from abroad thus create jobs for other citizens while most Nigerians who have the skills required to work in the refineries are jobless. Nigerians want to know why a country regarded as Africa’s largest crude oil producer is unable to refine crude oil to meet daily fuel consumption of its people. For how long will Nigeria export its own crude oil to be refined abroad and thereafter import petrol, diesel, kerosene, and perhaps aviation fuel back into the country to meet shortfall in domestic demands? Where are other products from the refined crude oil? I hope other products from refined crude oil are accounted for?

However, one significant event that recently took place in Nigeria’s petroleum industry is the passage of the Petroleum Industry Governance Bill (PIGB) by both the upper and lower chambers of the National Assembly (NASS). But the PIGB is awaiting presidential assent. So, when the PIGB is signed into law by Mr President, will there be no fuel scarcity again in Nigeria? One does not expect Nigerians to experience fuel scarcity as the petroleum industry will attract investors and open up the sector if liberalized. By implication, a liberalized petroleum industry is expected to provide a lasting solution to the perennial fuel scarcity.

But I ask again: Will liberalization of the petroleum industry stop perennial fuel scarcity in the country? Negative! Why? The body language of the FG suggests that it is reluctant to liberalize the petroleum industry in Nigeria because it lacks the political will to do so. “Unless the PIGB says something concrete about liberalization of the country’s petroleum industry, Nigeria will continue to have fuel scarcity,” says James Jeunkoku, an energy expert with Aristo Oils Investments. Why, I inquired? “The petroleum industry is of strategic importance to the FG because it hauls in plenty of Dollars to run government expenses.

Even the Goodluck Ebele Jonathan’s regime wanted to liberalize the petroleum industry but lacked the political will to do so.” Why, I questioned? “The petroleum industry is very lucrative and anyone who commands it, commands everything in Nigeria. This is the reason why the FG controls both the price and supply of fuel in Nigeria,” he replied.

Although, the NNPC is saddled with hundred percent importation of fuel, nevertheless, it has not performed its functions with elegance for quite some time. This is the reason why NNPC has always been caught in the web of corruption because its management get orders from above always. This has been Nigeria’s yoke for several years.

It is the petroleum industry that gives breath to all activities of the FG. The supremacy of the FG is a function of proceeds from the sale of crude oil. This makes the government at the centre very “juicy.” With all of this, do Nigerians think that the FG would be a spectator in the petroleum industry, while others go away with Dollars? What a tough question to answer!

If the FG agreed to liberalizing the petroleum industry, it must be done with due diligence. If transparency and accountability do not prevail, I bet all efforts to have a vibrant petroleum industry will be in vain. It may even end up worse than the privatization of the Power Holding Corporation of Nigeria (PHCN). This is my view because the way some private companies conducted their affairs during the fuel subsidy era of the immediate past government was indecent and very messy. If privatization of PHCN remains the way it is today and the proposed liberalization of the petroleum industry is not handled diligently, then Nigerians should be prepared for a very tough time ahead.

The FG needs to display an appreciable level of transparency and create a level playing ground for investors to operate. I know that the petroleum Industry has high entry barrier but the FG should discourage outright monopoly and oligopoly in private refining of crude oil. Other investors are interested in participating in the oil sector. The game changer will be the PIGB when it is duly signed into law by Mr President.

Liberalization of the petroleum industry will enable interested firms to do business easily in the sector while the FG provides a “safety net” against poverty and misery in the land. Perhaps, it is when the petroleum Industry is liberalized that Nigerians can be assured in the long term that there will be no fuel scarcity again across the nation. Until then, fuel scarcity will continue to be a way of life in Nigeria.

MA JOHNSON

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by MA JOHNSON

February 6, 2018 | 1:11 am
  |     |     |   Start Conversation

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