From Charles Novia, Lagos
I do not think this fuel subsidy issue is a scam as such.
Technically and in the books, it is a genuine attempt by past Governments to mitigate the shortfall in the daily consumption ratio but somehow, it became an avenue for handouts to political cronies.
General Sani Abacha started the importation of fuel in 1995 or thereabouts and it hasn’t stopped since. I do not think General Buhari will stop it too in the first 2 or 3 years of his administration.
I had a discussion with an oil industry player yesterday and he gave me a Layman’s insight into the problem bedevilling the sector.
First, we have 3 refineries in Nigeria in Warri, Port-Harcourt, Kaduna and perhaps a 4th one somewhere. These refineries are currently producing at 30% optimum capacity with national daily demand for petrol above the balance 70% to make it 100%. In other words, even if all the existing refineries produce at 100% capacity, the national daily demand for fuel would be met at only 55%. Which means to make up that shortfall, the government would have to do either of these things;
1. Ration the daily ratio of fuel; meaning we can’t buy more than a certain amount of fuel in our cars a day. Effectively, we would be managing the 55% we have.
2. Import the balance 45% to meet the national daily demand. In the present system we are importing above 70% because of the below par operations of existing refineries.
3. Build more refineries. Or privatise refineries and give licenses to private investors for refineries
Option 3 has already started. President Jonathan gave a refinery license to Aliko Dangote and he’s currently building the biggest refinery in West Africa which would be ready in 3 years. While Option 3 seems like a good option; it still cannot eradicate the problem of the daily shortfall within the next 3 years. Because it takes about 2 to 3 years to build a world standard refinery. So, while waiting for those refineries to be built, what does the government do? Option 2?
Agreed that the oil sector has rampant corruption and that there are interests within the oil unions and players who will never want the 3 refineries to work. These interests are waiting for Buhari and watching to see what his next move would be.
They waited for Yar’Adua and orchestrated a strike immediately he got in to force him to reverse the wholesome sale of the 3 refineries by Obasanjo to a consortium in 2007. OBJ had sold off the refineries and had poured sand ‘in some people’s garri’. So the cabal forced Yar’Adua to reverse that sale. If Yar’Adua hadn’t, perhaps the issue of fuel subsidy would have been a thing of the past.
The same cabal fought President Jonathan in 2012 when he removed the fuel subsidy in January 2012. They orchestrated the ‘Occupy Nigeria’ marches and twisted the government’s hands to rescind the decision. By the time Jonathan realised the trap he had walked into, it was too late. They had turned the masses against him, starting with fuel.
It is the same problem General Buhari will face from May 29. Forget the tripe Tam David West and others in APC are screaming that there is no subsidy and that the price of fuel will fall to N40 a litre. David West is 30 years behind and even then when he was Petroleum Minister, fuel was subsidised by the Federal government even when the refineries were operating at full capacity.
Whichever decision General Buhari takes, it would be tough. He can’t at the early stages ride roughshod over the oil unions and marketers. He would have to compromise to get things done.
The fuel imports will continue for a couple of years.
Only that it would be APC cronies who might get the new importation contract. Of course Tinubu already has been importing through his brother Wale Tinubu of Oando, so that’s nothing new.
Like Buhari said, don’t expect miracles from him. He can’t turn water into fuel.