In the closing days of Olusegun Obasanjo’s tenure as president, he (Obasanjo) sold some of Nigeria’s cash-guzzling refineries to the private sector at $750 million. On May 29, 2007, Umaru Musa Yar’Adua was sworn-in as president, just before the transaction could be consummated.
One of Yar’Adua’s first actions as president was the revocation of Obasanjo’s sale of the refineries. He returned them to the corrupt and inept management of Nigerian National Petroleum Corporation (NNPC). Nigeria is still losing trillions of naira annually to Yar’Adua’s retrogressive, statist posture.
In the last three years the federal government lost N377 billion to the operations of the four refineries. Petrol subsidy has remained a recurring decimal in government policy because the refineries operate at less than five per cent of their installed capacity.
The ex-depot price of locally refined petrol is less than N70 per litre even with crude oil price at $70 per barrel. With the cost of logistics and retailers profit margin, the open market pump price of locally refined petrol cannot be up to N100 per litre.
Petrol subsidy is imported inflation and would remain as long as Nigeria depends shamelessly on imported refined petroleum products. The federal government lacks the moral right to levy the open market pump price of petrol on a cheated populace when oil price rises above $60 per barrel. Such act of insensitivity could torch-off street riots which could slip out of control.
The government of Canada pays $500 per week to everyone who lost his job during the raging pandemic. The gesture would continue for the duration of the pestilence. Nigeria distributed one cup of rice and beans to a handful of impoverished families during the lockdown over the unprecedented pandemic.
Two weeks ago I had a text message from LASRA that Lagos state government has selected me as one of those to benefit from food supply during the lockdown. I was asked to text “FOOD YES” to LASRA if my residential address remains valid. I sent the reply to LASRA. Till today, no one has supplied a grain of rice or beans to me. Such a government lacks the moral right to hike fuel price when landing cost crosses N150 per litre.
The federal government knows that the power privatization of 2013 has generated more darkness than it met. Government is therefore supplying petrol at subsidized rate for the populace to generate power from millions of micro generators whose combined output account for 70 per cent of the power that runs the economy.
Petrol subsidy is government’s way of bribing the populace to ignore the monumental treasury looting that has made Nigeria the global headquarters of poverty.
That is why many have casually dismissed Mele Kyari’s devious prophecy on petrol subsidy as the ranting of an over-zealous usurper who mistook his role as a servant for that of a master.
“Fuel subsidy is gone forever in Nigeria”, declared Kyari, the group managing director (GMD) of NNPC.
The GMD warned that NNPC would no longer bear the additional cost burden (under-recovery) when the landing cost of fuel rises above the official pump price decreed by government. Kyari spoke with the finality of a despotic ruler even when he knows that as GMD of one of the world’s most corrupt oil firms, he lacks such powers.
Ironically, Kyari’s predecessor made similar pronouncement in a tone devoid of Kyari’s autocratic mien, blind zeal and enthusiasm. NNPC announced in May 11, 2017 that government has removed petrol subsidy. That was when the official pump price of petrol almost doubled from N87 to N145 per litre.
Barely one year after the pronouncement, crude oil price sailed pretty close to $70. With that development, a weak naira, inadvertently pushed the landing cost of imported petrol above N160 per litre.
With abject poverty plaguing Nigeria, government knew that it could spark uncontrollable street riots if it asks consumers to pay the open market price of petrol.
Petrol subsidy resurfaced as NNPC was ordered to bear the additional cost through the fraudulent under-recovery. Kyari’s prophecy that petrol subsidy is gone forever in Nigeria could only be fulfilled if Dangote Refinery comes on stream at the end of 2020.
No one can guarantee that at the moment. Coronavirus pandemic might push back the completion deadline.
However, the pestilence plaguing humanity at the moment would eventually go away. If that happens in the next four months, demand for crude oil would surge as airlines, land transportation systems and factories return to business.
That could push the price of crude oil well over $60 by the end of 2020. Consequently, the landing cost of imported petrol would rise above N150 per litre. COVID-19 would push Nigeria’s economy deep into recession. The grievous pains of that recession would still be dominant when oil price recovers and push the open market pump price of petrol above N160 per litre.
With unemployment at alarming proportions, inflation surging and abject poverty on rampage, it would be extremely difficult to increase petrol price. Subsidy would resurface. That is when Kyari would clearly be seen as a false prophet.
Petrol subsidy is an ill wind that does no one any good. It drains government treasury.
Consumers’ gains from petrol subsidy pales into insignificance when compared to the trillions of naira diverted into private pockets.
Ironically, even those in abject poverty who gain next-to-nothing from the fraudulent scheme would offer a stiff resistance to any move to scrap it.
Obviously, the four refineries would never refine enough products for Nigeria under the management of NNPC.
Kyari should be ordered to auction the refineries and safe the billions of naira lost to their operations annually.
The federal government should restrict itself to the role of regulator in the downstream sector of the oil industry. It is only private investors who can refine enough products for Nigeria. That is the only time fuel subsidy would die a natural death.
Kyari’s insidious pronouncement on petrol subsidy is untimely, indecently presumptuous and calamitously incongruous. His employers would shun his false prophecy when they have to choose between street riots and the return of petrol subsidy.