By Dan Agbese
One of the huge problems President Muhammadu Buhari is faced with literally thrust itself in his face last week. The great shut down and the total paralysis of the nation because oil marketers refused to lift oil over the non-payment of their outrageous and fraudulent subsidy claims must have told him something about the monsters in the oil industry and their unholy strangle hold on the nation’s economic jugular.
The new president does not need to look further to see that since his time in that ministry in the 1970s, the under underbelly of our petroleum industry has become so rotten it is unsightly.
The fraud and the corruption in the fuel subsidy regime is a tip of the iceberg. It confronts Buhari with tough choices.
His first choice is to let it be business as usual by continuing to fund the subsidy. I am sure he needs no one to tell him this option would compromise the change he has promised us. Anything that makes him helpless makes the people hopeless.
The other option is for him to ride on the crest waves of his grassroots support by scrapping the current vote for fuel subsidy in the federal budget. If he takes this option, he would risk a possible public outcry or even backlash. Can he risk it? Yes, he can. It would be the hard-headed right step in the right direction. He needs one bold policy step to set the tone of his administration.
It requires courage; the sort of courage we believe the president has. It requires commitment; the sort of commitment we believe the president has towards recovering our country from the bands of thieves that act with sickening impunity.
The best brains in the oil industry have repeatedly told us there is no subsidy on our petroleum products. But the payments go on. Senator Bukola Saraki has estimated that in the last five or six years, “over $32 billion (had been) wasted on it.” According to him, the country loses “a total of $2 billion to fake fuel subsidy operators.”
There are about 82 of such companies officially licensed by the NNPC to perpetrate the fraud and the mindless corruption. The federal government pays three or four times the budgeted vote for fuel subsidy every year.
The immediate cause of the strike last week by oil marketers was the refusal by the then minister of finance and co-ordinating minister of the economy, Dr. Ngozi Okonjo-Iweala. She did not think the N159 billion the marketers submitted to the government as foreign exchange variation was authentic. She not only vowed not to pay but also took the unusual step of urging Nigerians not “..to allow themselves to be blackmailed.”
Buhari is a former minister of petroleum resources. He is not ignorant of the political game in the NNPC and its parent ministry. In a short video interview on YouTube the president made it clear he did not believe there was fuel subsidy. He asked rhetorically: “Who is subsiding whom?” His conclusion is that it is all part of the fraud and corruption in the system. Aha, yes, the president knows.
The politics of oil subsidy has a long sentimental history. Nigerians believe that as citizens of an oil-producing nation they should pay less, much less, for petroleum products. The poor are also entitled to a good slice of the national cake you know. This sentimental argument has led to many experiments and permutations.
Each time the federal government increased the prices of petroleum products it tried to protect the poor by introducing some so-called cushioning effects. President Ibrahim Babangida introduced one price for commercial vehicles and another for other private vehicle owners. It did not work. The poor did not benefit from it in any shape or form.
The late head of state, General Sani Abacha, increased the price of petroleum products from three Naira to three Naira, fifty kobo. He used two and half percent of the new price to set up the Petroleum Trust Fund, PTF, headed by Muhammadu Buhari, our new president. That fund did titanic things with the rehabilitation of roads, health and educational institutions.
Obasanjo increased the prices of petroleum products three times in his eight years in office. His last increase and the failed attempt to cushion its effect on the poor was the massive purchase of buses, motorcycles and Keke Napep by state governments for sale to “bona fide” transporters at subsidized prices. There were no takers. A massive waste of public funds. The contractors laughed to the banks. The people were cheated, not helped.
The mathematics of fuel subsidy seems simple. NPPC licenses independent petroleum marketers to bring in petroleum products and sell at prices dictated by the NNPC instead of prices dictated by demand and supply in the oil sector. The marketers ask the corporation to pay the difference between the landing cost and the pump price. The corporation pays up. This is supposed to be the fuel subsidy, easily the quickest path to the billionaire club.
The 2011 general elections witnessed the indiscriminate recruitment and the licensing of at least 115 fuel importers, most of whom had never imported one litre of petroleum products in their lives. The fuel subsidy payment ballooned to more than one trillion Naira. The three approving authorities – President Jonathan, his wife and the minister of petroleum resources, Mrs. Deziani Madueke – could not have been more generous to their friends and the sons and daughters of political acquaintances.
When EFCC tried to investigate the worst excesses in these payments for fuel not supplied, it chickened out when it found that the trail led upstairs. Matter closed.
Buhari has the answer to the fuel subsidy cut out for him, almost. If there is no subsidy, the question of removing it does not arise. All he has to do is to explain to the public that the government would no longer fund private businessmen at the expense of the people in the petroleum sector.
Throwing out the subsidy nonsense should signal the beginning of the massive clean up in the ministry of petroleum resources, NNPC and its subsidiaries that he must undertake.
Cleaning up the oil industry is a huge and complicated problem. I have no illusions about what Buhari would confront here. Our past leaders allowed sentiments to trump courage in the decision making process here. It is no use blaming the so-called cabal, a faceless but powerful group of men in the industry who determines what happens there. Buhari has to take them on. They cannot be more powerful than the government itself. Blaming the cabal is a cop out. It excuses the do nothing about the problem that is killing our economy.
Buhari is in luck too. During the fuel subsidy claims and counter-claims, in 2012, both the NNPC and the federal government set up committees to study the problems and advise them on what to do. Nuhu Ribadu, former EFCC boss, headed one and the banker, Aig-Imokhuedo, headed the other.
They have been gathering dust. Buhari needs to dust off these reports. I am sure they will provide him with enough information to enable him draw up the road map he needs to navigate his way through the piranha infested murky waters of fraud and corruption in the oil sector.
Buhari should put an end to our dancing around the full deregulation of the petroleum. It is the way to go. We have been victims of sentiments for too long here. While we protest even minimal increases in the prices of petroleum products, we see no contradictions in our behaviour when we pay as much N600 per litre when the oil marketers induce artificial scarcity. Let the oil marketers import fuel, charge economic rate and let us put this nonsense of periodic fuel shortages behind us.
The shame of an oil-producing nation with four failed refineries is just that – a big shame. Buhari is not super human. Bit I have the audacity to believe he has the audacity to make changes we can live with happen.
– This Best Outside Opinion was written by Dan Agbese/Daily Trust