Early this year, precisely during the New Year festivities and subsequently, Nigerians were once more subjected to the irritant scarcity of petroleum products. Long queues, thought to belong to the unpleasant days of perennial fuel scarcity in the previous administrations, returned in full force as the few distilling stations that had petrol were overcrowded. Expectedly, the official pump price went off the roof as desperate motorists and other consumers were compelled to pay whatever amount black marketers, who ironically had the products in good quantity, imposed on them.
Though the Nigerian National Petroleum Corporation (NNPC) spiritedly urged the public against panic buying of the products, but this hardly assuaged the desperation of the people especially those that had travelled to their villages for the yuletide and needed to return to their respective stations.
The lingering scarcity again raised the vexed matter of petroleum products subsidy regime disparaged on the account of the bowel retching corruption associated with the policy. In fact, the present administration had in 2016 jettisoned the subsidy policy, instead increased the pump price from N87 to N145 a litre with assurance that it will plough back for infrastructural developments proceeds it will saved from the removal of subsidy regime.
Besides, the federal government said the subsidy regime and the dirty deals associated with it were at variance with its anticorruption war and promised to channel its resources into getting the refineries up, and save the trillions of naira past governments squandered on fuel subsidy payments. However, it seems the Buhari government may have secretly returned to the subsidy regime months after persuading Nigerians to accept the petrol pump cost raise as the price for scraping subsidy. That this is so is buttressed by the Central Bank of Nigeria (CBN) disclosure that Nigeria spent $36.3 billion, about N11 trillion, on fuel import between 2013 and 2017.
The CBN said the amount is part of the $119.4bn the country spent on the total importation of products from other countries within the period.
The fuel import represents 30.4 percent of the total sum. Two days ago, the Nigerian Governors Forum accused the NNPC of fraudulently doubling daily consumption of petrol from about 30 million litres to 60 million litres with huge implications on subsidy payment, and therefore demanded thorough investigation of oil subsidy payments made from 2015 to date.
Also, only recently, the House of Representatives adhoc panel headed by Garba Datti Muhammad (APC, Kaduna), demanded detail explanation from the NNPC on the proposed $1.8bn for the Turn Around Maintenance (TAM) of Nigeria’s four refineries in Port Harcourt (2 refineries) Warri and Kaduna. According to the Minister of Petroleum Resources, Dr. Ibe Kachikwu, the total cumulative amount needed to repair and bring three refineries to full capacity is in the region of $1.1 and $1.2 billion excluding the cost of pipeline.
Going by this, the $36.371 billion spent on importation is enough to fix all Nigeria’s refineries for the next 30 years assuming an average of $1.2 billion is spent every year on repairs of the plants, according to experts’ analyses.
A lecturer at the Federal University of Petroleum Resources, Effurun, Prof. Ogbarode N. Ogbon, while analysing what half of $36.371 billion can do for Nigeria said it can deliver more than 225 state-of-the-art 10,000 barrels per day crude modular refineries at unit cost of $20 million and at total cost of $12.4 billion. More than $20 billion will still be left for other critical development projects for the country.
Prof. Ogbon said the amount can build three times the number of the 75 modular refineries with the capacity to refine about 10,000 barrels per stream day Nigeria needs to attain a measure of self sufficiency by 2020, and this could facilitate reasonable disappearance of fuel scarcity in the country. Petroleum Minister Dr Kachikwu admits the subsidy regime is a drain on the economy as is the perennial scarcity of petroleum products which have profound adverse effect on infrastructural development and indeed economy future of Nigeria.
“Going forward we need to address the issue of pricing, there is a disparity between landing cost and cost we are selling. If we are going to sell at N145, we need to put some mechanisms in place so that the private sector will go back importation.
We have a committee looking at this and we are still going to submit a report for review. In view of the proclaimed diversification of the Nigerian economy, it stands to reason that liberalization the downstream sub-sector of the oil sector to improve efficiency and ensure product availability at all times is the way to go.
That is the trend world over. Saudi Arabia celebrated the decision to privatize Aramco and raise needed cash to fund its social and economic services. Working the talk on modular refineries and breaking the monopoly of the NNPC as part of liberalization will go a long way to open up the economic space, end fuel scarcity and block loophole for siphoning funds
