Deregulation: The intrigues, politics
By RAZAK BAMIDELE
Wednesday, February 10, 2010

Lukman&•Ajumogobia&•Adetokunbo&•Makinde

As suspense over the planned deregulation of the downstream oil sector persists, RAZAQ BAMIDELE examines the politics, intrigues and confusion the policy has caused the citizenry in recent times. The phrase, deregulation of the downstream oil sector, is neither new nor strange to the people . It has been existing in the national lexicon as subsidy removal. To an average Nigerian, when the word ‘deregulation’ is mentioned, what readily comes to mind is removal of subsidy and increase in the fuel prices.

This must have informed the antagonistic postion of the populace towards the policy. And that must have also informed the frantic efforts of the Federal Government at explaining the benefits the new policy would bring to the citizenry.

The journey
Going down the memory lane, from General Yakubu Gowon’s regime in 1973 to the Obasanjo’s administration (1999-2007) down to the present Yar’Adua/Jonathan dispensation, Nigerians have experienced fuel price hike almost 20 times.
It started in 1973 when an equivalence of a litre was selling for 6kobo until it rose to N70 under Obasanjo before Yar’Adua brought it down to N65 per litre.
But President Yar’Adua’s reduction of the petroleum products price that was welcome with relief by Nigerians is now turning into anxiety and fear, as the proposed deregulation of the downstream oil sector is seen as collecting with left hand, what Yar’Adua gave out with the right hand.

Government’s explanation
The reason given by Federal Government over the need for deregulation is that, it has been over subsidizing the petroleum product. According to the Petroleum Minister, Dr. Rilwan Lukman, production of a litre of Premium Motor Spirit (PMS) popularly known as petrol now cost N112.68.
Going by Lukman’s revealation, and with the current official fuel price, consumers will have to pay extra N47.68 on every litre of PMS bought. And when the subsidy is removed, the extra money to be made from the exercise, the government promised, would be ploughed back into the economy.

The infrastructure and other social amenities, according to the government, would be improved to make life more abundant for the populace.
While allaying the fears that the policy would lead to escalating cost of procuring the commodity, the government holds a contrary opinion, saying, rather, it would open the market for competition where marketers would woo customers with affordable prices.
The example of what is currently obtainable in the telecommunications industry is being cited to butress its point.
The government, however, has a supporter in the Managing Director, Genesis Worldwide and Chairman, Integrated Oil and Gas Limited, Captain Emmanuel Iheanacho, who confirmed that the policy is a market opener for competition.

Capt. Iheanacho was quoted to have said that, the policy, if properly executed, would lead to cheap price of the commodity involved.
“We want a situation, where, those who are efficient in managing logistics of products acquisition, storage and delivery will bring that expertise to bear in ensuring that we get the cheap price of products,” Iheanacho stated.
According to him, the oil and gas market has been deregulated long time ago, saying, yet, there is no absolute monopoly.
“What you see is what will happen if PMS market is deregulated. You will see people jostling for patronage all the time and the price element is the key for competition there. People would be jostling and the price will go down to the minimum that nobody can go below,” he disclosed.

Apprehension
When the policy was being muted, the populace put their fate in the hands of the Nigeria Labour Congress (NLC), which they see as the masses Messiah.
But when the government officials and all the stakeholders in the oil and gas industry met last December, the reports that came out of the parley had it that, the NLC and other stakeholders have succumbed to pressure and have supported deregulation.
The populace cried blue murder because they thought they had been betrayed by the body that is supposed to save them from the claws of the oppressors who, they believe want to milk them dry.
But the Labour came out in full force to debunk the impression that its leadership has abandoned its responsibility of saving the masses from any anti-people policy.
The acting General Secretary of the NLC, Owei Lakenfa, issued aa statement to erase the impression that Labour has given in to government pressure and support deregulation.

He described Dr. Lukman’s statement that, “virtually all the stakeholders of the oil industry, including the NLC had accepted decision of government to deregulate the downstream oil sector of the petroleum industry,” as blackmail.
Lakenfa therefore, assured that, “the NLC will not back out from its resolve to protect the citizenry from the harsh effects of the detrimental policies,” asserting that, “deregulation is unacceptable.”
According to him, the polity is an attempt by the government to increase the price of petroleum products in the country, disclosing that, “the template presented at the parley showed that, if implemented, fuel will cost N94 per litre.”
He urged the people to disregard the blackmail and be prepared to join the NLC in resisting the policy.

Opposition
The policy has been suffering attacks from within and outside the government circle.
Mallam Sanusi Lamido Sanusi, the governor of the Central Bank of Nigeria (CBN) is one of those who are critical of the policy.
Having taken a critical look at the policy, he offered that, “it is unnecessary,” warning that, if it is not reversed, it would be “a tool to heighten inflation in the country.”
Also, the Prelate of the Methodist Church, Dr. Sunday Makinde, described the policy as “simply anti-people,” warning that if not properly handled could spark off unrest.

While a renowned activist, Sheu Sani views the policy as government’s funny way of shirking its responsibility to the masses, former Information Minister, Dr. Walter Ofonagoro, wants 6,000 Megawatt of power generation attained before implementation.
A few other observers are cautious in their reaction over the issue. A banker and Chief Executive, Institute of Chartered Secretary and Administrator (ICSAN), Mr. Dele Togunde, was quoted as saying that, big corruption in the oil industry is a challenge to deregulation.
To him, if money to be realised from removal of subsidy would be used to develop decaying infrastructure, he would not have any problem with it. His fear, however, is a situation where a cabal would be allowed to sit on the gains and milk the country dry while the masses suffer.

Supporting Togunde’s view is the Chairman, Nigeria Independent Petroleum Company (NIPCO), Chief Bestman Anekwe, who says the policy is not totally bad if well implemented also expressed fears on how the government can go about it to benefit the masses that are the main target of the policy.
Founder and President of Oodua Peoplas Congress (OPC), Dr. Fredrick Faseun is not comfortable with the argument that, the policy is aimed at curtailing a cabal that has been benefiting from the government subsidy on the petroleum products.
He prefers a situation where the government would deal with the cabal instead of coming up with a policy that would have harsh economic effect on the masses.
Here is the view of a former Minister of Finance, Abu Gidado:

“The country has a responsibility to specific areas that it could deregulate in the interest of the nation. But, deregulating fuel subsidy is an issue which the government should be conscious about so that they don’t cripple even the few scanty industries that are still surviving.
“Countries the world over subsidise different items or sector for better economic development and growth. America has been subsidising agriculture for years. I see no reason we should not select certain items that have very strong bearing on economic growth and subsidising them?”
Against this background, Gidado cautions the proponents of the policy to have a rethink so as not to throw the people into wilderness, pointing out that, deregulation will hurt Nigerians.

Implementation
With the statements credited to some government officials like the Labour and Productivity Minister, Prince Adetokunbo Kayode, Minister of State, Petroleum Ministry, Odein Ajumogobia, General Manager, Nigerian National Petroleum Corporation (NNPC), Sanusi Bakindo and the Senate Leader, Senator Teslim Folarin that there is no going back on deregulation, there has been scarcity of the product that has led its price to go up as high as N130 per litre in some places in the country.
The scarcity and the unofficial price hike started in November when it was rumoured that the policy would take off on November 1, 2009.

But the delay in the implementation might not be unconnected with the absence of President Umaru Yar’Adua, who is receiving treatment in a Saudi Arabia hospital.
And in the anticipation of the implementation, the National Vice President of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASAN), Mustapha Nuhu Wali urged the government to put in place, certain palliatives to cushion the envisaged adverse effects it might have on the masses.
As it were now, the suspense, intrigues and politics on the planned deregulation of the downstream oil sector in the country go on.