Groaning Over Deregulation of Oil Industry In Nigeria
Posted: Wednesday, March 25, 2009
by Rahaman Onike
The removal of the subsidy from the 2009 budget by President Umar Yar'Adua shows government poor understanding of the social realities of the current global economic recession on average Nigerians and it also creates an impression that the government is having a wrong notion of how best the nation can overcome her balance of payment difficulties. It is least expected that the government would re-direct and re-structure the oil sectoral policy at this critical moment in our economic life as a nation.
With the removal of oil subsidy, the idiosyncratic tendencies of people at the helm of affairs of the nation are exposed. Rather than getting more people convinced, government left many confused while defending and justifying their stance on fuel deregulation.
However, the workers are also right for protesting against deregulation. They are particularly concerned with the effect of the policy on the common man. The shameful admission by the government that 90 per cent of the petroleum products consumed in Nigeria today are currently supplied through importation, even with our four refineries, is a trend that raises further questions.
The government should fully accept blame for causing the nation an enbarrazement as the six largest producer of petroleum, having to depend on import of domestically consumed fuel. And the alleged sabotage by persons within the system must be properly investigated to expose those that crippled the domestic refineries. Also, those that were involved in diverting already subsidized petroleum products through smuggling activities must be blacklisted and be prosecuted accordingly.
As I have noted, deregulation in this country is a mere gimmick to increase the fuel prices. Even in the present circumstance, reasons abound that government might not be interested in genuine deregulation or any fundamental reform. This is against the backdrop of the position re-inforced and canvassed by the Minister for Petroleum, Dr Rilwan Lukman as reported in the dailies that at a meeting with the fuel Marketers, he urged them to accept selling at a new price. This in itself suggests that by conception and design, deregulation will bring untold hardship on the people as there is bound to be increase in the prices of petroleum products and will further create gap between the rich and the poor populace.
But more particularly, the Presidency and the Ministry for Petroleum Resources have not succeeded in proving that the government was paying subsidies as we have been made to believe.
Even with deregulation, concerted efforts need to be made to prevent racketeering, fraud and sabotage in the future operations of the reformed sector. The quest to create more supply sources is laudable and the government plan to encourage the springing up of private refineries and its desire to allow more players into marketing and distribution of petroleum products all sound good but depend on efficiency of the industrial players and the available infrastructure in the sector which is the primary objective of policy.
Equally, the proposed reform of the Petroleum Products Pricing Regulatory Agency (P.P.P.R.A) which is responsible for determining the price of oil ought to have been carried out before the government announcing deregulation, if the government is sincere with its admission that the Agency had been massively compromised.
More importantly, workers input need to be accommodated as a way to show government seriousness and commitment to structured and transparent dialogue in implementing the oil sectoral reform.
Having admitted poor effect and low impact of over 1 billion dollars frittered by Obasanjo's Administration on the Turn Around Maintenance of the perpetually ailing refineries, the need to probe the account of the past repairs is essential to show the government readiness and preparation for the reform. Or the cronies that feasted on the contracts for the repair of the sickly refineries are sacred cows that could not be prosecuted. Failure to investigate allegations of corrupt enrichment in the petroleum sector, will eventually create image problem for the government.
Candidly, deregulation may not stop popular clamour for the policy reversal until the existing refineries are made to be optimally functional, irrespective of the management structure or system of ownership in operation. It is high time the government put in place measures to cushion the effects of deregulation on the poor that constitute over 70 per cent of the population.
The real issue therefore is how the government will re-package the reform programme in order to allay the fear of the masses and to put mechanism in place to prevent severe socio-economic backlashes and other negative consequences of arbitrary increase in the fuel pump prices, which are major characteristics of deregulation.
By:
ONIKE RAHAMAN
Public Affairs Analyst,
Oyo Town ,
Oyo State .
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