About 6 years ago, the issue of scaling down of fuel subsidy in Nigeria was raised by some of Nigeria’s foreign creditors in order to pave way for debt relief. After much water had gone under the bridge, Nigeria’s huge sovereign debts then were “forgiven”.
Nigeria’s refineries have neither enlarged their capacities nor has Nigeria built new ones. Importation of refined petroleum products has been a cash cow which many Nigerian government officials have milked for years.
So much fuss has been made over the years about government fuel subsidy. Whenever prices of crude oil have been excessively high on the international market, such claims have been plausible, given the deliberate neglect of Nigeria’s refineries and the consequential reliance on importation of petroleum products which are needed to keep the economy running.
When Mr. Yar’Adua was sworn in as Nigeria’s president on May 29, 2007, he swore to be a “Servant leader”. It is apparent by chains of events after that lame vow that he does not know the import and significance of what he desires to be, but is not. He met recently spiked prices of petroleum products, which were effected by his predecessor Obasanjo. For instance, a liter of premium motor spirit (petrol) then officially sold for N75. It was said then by Yar’Adua’s officials that the price was a subsidized one, that the right unsubsidized price should be about N95 a liter. The claim was that for each liter of subsidized liquid fuel, government paid about N20. Besides, Nigerians were told that the country consumed about 30 million liters of liquid fuel a day, and that even if all the country’s refineries produced at full capacities, they could only produce 18 million liters a day.
Now, even if government spent N35 a liter subsidy in 2008 (Yar’Adua’s government had reduced the pump price of premium motor spirit (petrol) to N70 a liter, and prices of crude oil on the international market rose to about USD 145 a barrel at one time last year before the plummet), that would be about N384 billion spent on subsidy instead of the humungous N640 billion that Yar’Adua’s government claims to have spent on subsidy last year; that is besides the fact that government stopped subsidizing diesel. Furthermore, how many liters of liquid fuel were refined locally? Does locally refined fuel attract the same amount of subsidy as imported fuel, given that no import duties and international freight costs would be incurred? What was the total amount of fuel imported last year, and what amount was refined locally? We know from reports that the Warri refinery made a profit of more than N 5 billion last year; but we don’t know about the other refineries in Port Harcourt and Kaduna. At least we can say that we refined petroleum products locally last year. Could it be true that some locally refined fuel is quoted as “imported” in order to deceive Nigerians that government is spending so much to subsidize “imported fuel”? I reiterate that the Freedom of Information bill be passed without delay by the National Assembly and signed with haste by the president. This is the position of the Nigeria Rally Movement (www.nigeriarally.org).
At the time Yar’Adua was sworn in as president, the price of a barrel of crude oil on the international market averaged USD 100. Today, the price of a barrel of crude oil on the international market averages about USD 40 (prices are still falling given the global economic recession), which is less than 50 percent of the average of USD 100 in 2007. At that time, the average exchange rate was N130 to USD 1. At the CBN rate of N 145 to USD 1, given the mathematics of ratios and relations, without subsidies, a liter of petrol should cost not more than N42.37.
I therefore find it highly provocative that the government of Yar’Adua, which has demonstrated ludicrously appalling inefficiency, ignorance, and lack of executive dexterity and vision, should seek to stir up a crisis with this ill-timed and wrong announcement about removal of some non-existent subsidy- in the true sense of the word. This is wrongly timed because intelligent leaders of the world are seeking for ways of cushioning the effects of current global economic recession, rather than seeking to add to the woes of a people by provoking profiteers to hide behind such announcements to exploit a gullible nation. The announcement is wrong because there is no subsidy in place!
If the only way Yar’Adua thinks he can command attention (for most Nigerians, there is no evidence the man is alive to his responsibilities) is to throw stones at sleeping dogs, Nigerians must rise up and show that they are not sleeping and cannot afford to now that the deception coming from Yar’Adua’s quarters is so strong. Pure and simple, Nigerians, there is no subsidy for fuel at the moment. We are intelligent and well informed to so say. Nigeria is drifting without a leader. National security is endangered, and Yar’Adua has no clue. With the scorching economic crisis and Yar’Adua’s complete inactivity, the social order stated in section 17 (1) and described in section 17 (2) is completely being eroded.
In USA, citizens are filing for unemployment benefits in the wake of the crisis. In Nigeria, although our constitution provides for similar benefits for Nigerians [see section 16 (2) (d)], President Yar’Adua either does not know the content of the Constitution he swore to uphold, or does not care. With Port firms laying off more than 6,000 workers lately, many other firms doing same, and banks placing embargo on employment, Yar’Adua can only come up with a bland announcement of deregulation and “probe” of the Petroleum Products Pricing and Regulatory Agency (PPPRA) after evidence that he has frittered away our money without understanding of the PPPRA pricing template.
The band of growing unemployed in Nigeria is getting restless. I warn; Yar’Adua cannot afford to be holed up in Aso Rock while Nigeria burns. Massive investments in public projects like railways, roads, and power across the country are needed now. The Central Bank must be prevailed upon by Yar’Adua to significantly reduce the minimum rediscount rate (MRR) in order to force down cost of borrowing money from the banks to a low single digit. With banks spending heavily on diesel to power their generators (as Yar’Adua’s hyped emergency in the power sector is only his to understand) and security, a high MRR is killing. This is the stimulus package Nigerians need. These actions can create jobs for many Nigerians who are without jobs. But can Yar’Adua do this when he is only busy canceling projects all over the place without rational substitutes? Can he do it when he does not know the meaning of “emergency” in the power sector he had supposedly announced in August last year, more than one year into his presidency, with nothing to show for the show? Can he do it when he continues to waste Nigeria’s money on useless advertisement about “7-point agenda” on television?
Lies and confessed ineptitude of government:
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The Nigerian government claims that it spent N640 billion to subsidize fuel in 2008. I would like readers to read the statement below which was recently credited to President Yar’Adua’s Special Adviser (Media and Communication) Segun Adeniyi, in his effort to justify government’s decision to “deregulate” the downstream sector:
"Deregulation doesn't necessarily mean increase in fuel price. As we all know, what government is trying to do is question the rationale behind the subsidy in the first place. What and who are we subsidizing? As the Minister of Finance said last week, we have been subsidizing corruption, inefficiency and fraud in the sector. And these are the things we are tackling. Because even the template of PPPRA [Petroleum Products Pricing Regulatory Agency], there are issues there that are being resolved by government and labor. We believe that government and labor can partner on this issue because at the end of the day, we should ask ourselves questions why fuel price is not going down in our country while it is going down in other countries. This is because of the current global recession that has led to low price of crude oil. So, there are a lot of questions we should ask about the sector that are not being asked. And these are the issues that will be tackled in the coming days.The approach we are taking is that government will partner with labor. The President told labor leaders last week that he will partner with labor on this and every other issue. We are concerned about the welfare of the Nigerian people as labor is. So, I believe we can reach a common position on this issue. And I believe we will, because at the end of the day the essence of the whole dialogue is that we deregulate the market and ensure that we are not held to ransom by cabals".
Furthermore, the government of Yar’Adua announced that it had instituted a probe into the activities of the Petroleum Products Pricing Regulatory Agency (PPPRA) and all the bodies involved in the regulation of fuel prices. The probe, termed "process auditing," according to government, was aimed at finding out how the agencies arrived at the template they used for the prevailing petroleum products' prices.
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I am scandalized that the president’s Special Adviser (Media and Communication) failed to see the ridicule of government by the announcement of a “probe” of PPPRA to “find out how the agencies arrived at the template they used for the prevailing petroleum products' prices”. So, the government of Yar’Adua threw away the people’s N640 billion in 2008 at “cabals” (Adeniyi used the word) in the oil sector? So, Yar’Adua had the audacity combined with folly to “subsidize” corruption without first verifying the rationale of the template used by a government’s agency, PPPRA for the “prevailing petroleum products' prices”?
Is it not puerile and disingenuous for Yar’Adua to subsidize petroleum products pricing for over a year and claim to have spent hundreds of billions of naira in the process, only to wake up one morning and conclude he does not understand the template used by PPPRA? And he had been Minister of petroleum for a while! He has now ordered a “probe” whose fruitfulness is in doubt. We have seen this drama before, and we don’t like it one bit. We don’t need a probe, we need a robe of transparency on Yar’Adua’s government. We don’t desire a probe, we desire a rope around the necks of our deceivers, who have had a long laugh for decades now.
Yar’Adua has questions to answer to the Nigerian people. The issue is beyond removal or non-removal of “subsidy”. The issue is who he gave away our hundreds of billions of naira to. The issue is beyond some useless “probe”. The issue is that Nigerians must hold Yar’Adua on the throat and make him spill the beans-Who has he been giving away our money to? We must not accept a short memory, Nigerians. This man declared his assets publicly, and some Nigerians hailed him (I did not; I knew right away that he was playing to the gallery. I saw quite early that this was not the man for the job.) He turned around and collected zillions of naira from sons-in-law who obviously used government’s money. He must probe himself for the millions of dollars that he reportedly collects as commission for each barrel of crude sold. Yar’Adua turned around and destroyed the Economic and Financial Crimes Commission in order to protect himself and his corrupt friends. He turned Nigeria’s saints into villains and hounded them from coast to coast. I warned very early that we were at the door steps of the worst era of corruption in Nigeria. How I wish I was wrong!
You have hired a servant to work for you; you have entrusted everything into his hands. He then signs and pays for a deal and continues to do so for over a year. Suddenly, he wakes up one day with an alarm and initiates a “probe” in order to find out if he had overpaid. This is balderdash! That is “servant leader” Yar’Adua. With every sense of responsibility to my nation, I demand the resignation of President Yar’Adua. His continued stay in power is a grave danger to our nation. His thinking is suspect; his reasoning is unreliable; and his actions and inactions are unreasonable and non-strategic.
Recently, I read a report that the National Assembly would “probe” the cancellation of the railway project by President Yar’Adua. I was sad and surprised, all rolled in one. I was sad because Nigerians have been taken for granted for so long; surprised because it was the same National Assembly who not long ago (last year) claimed that the contract had been “over-inflated by USD 700 million”. Please, read below comments by the chairman of the senate committee on petroleum (downstream sector), Senator Emmanuel Paulker on Yar’Adua’s plans to deregulate the downstream oil sector:
"On removal of subsidy, we believe that the government would have been compelled by the unsustainable fiscal burden involved in subsidizing petroleum products to the tune of N640 billion in a single year. We have always believed that subsidy should be removed, although not in the abrupt way in which it has been done, but through a gradual phasing-out process. And while that exercise is in progress, the government should adopt immediate measures to tackle those foregoing elements that add to cost. For example, if the refineries were functioning optimally, freight and port charges would be eliminated. Also, if pipelines that make up our distribution network were in order and new ones were built, the enormous cost incurred through haulage by trucks would fall, thereby contributing to reduction in the pump prices of petroleum products. All these will simply result in a less prohibitive and more affordable pump price when the phased deregulation exercise is concluded".
The summary of what the senator said was that Nigeria needs more refineries operating at optimal capacities and efficient transport modes-pipelines or railway transportation for heavy duty haulage. The question is that what has the senate of the federal republic of Nigeria done with the urgent letter written to them by president Obasanjo in 2006 about the railway project, whose first phase was to have been completed next year, which Yar’Adua has now cancelled without a whimper from the senate? [See my Straight Talk to Nigeria series-particularly, the article titled, Dangers of an idle government]. Yar’Adua’s time is up. Every day he spends on the seat as Nigeria’s president is one more day of agony for our people.
I conclude with a clear position of the Nigeria Rally Movement (www.nigeriarally.org):
1. All importers of generators into Nigeria must be given one year to discuss plans and arrangements with their foreign generator manufacturers to establish manufacturing (not assembly plants) in Nigeria. During the one year window, each unit of generator imported into Nigeria shall attract 50 percent tax, which together with funding from other sources, will be used to build power stations-wind, hydro, thermal, and solar-and refineries. After the one year window, importation of generators into Nigeria shall be completely banned. In addition, export of crude oil shall be stopped once Nigeria provides enough refineries to refine all the crude we export daily.
The electricity problem can never be solved without managing boldly the menace of international generator manufacturers who have seamlessly enjoyed the collaboration of Nigerian dealers and government officials.
2. Importers of and dealers in automobiles should be given one year to convince their foreign partners to establish automobile manufacturing plants in Nigeria. After the one year window, importation of all automobiles shall be banned. Government shall pay into a Challenge Account with the Central Bank some amount of money as reward to Nigerians who will help the nation overcome certain challenges. For instance, at least USD 100 million shall be set aside for any group of Nigerian scientists and industrialists who shall come together to design, format, and mass produce truly made-in-Nigeria cars, vans, trucks, or motorbikes which meet international quality for export. The ban shall remain in force until Nigerian made automobiles find markets overseas. Convenient export policies shall be made which will make Nigerian made automobiles competitively cheap abroad, and consequently attractive.
We need to challenge ourselves to produce or perish. We need a president with the heart of a lion, the eyes of an eagle, and the craftiness of a serpent to pull this through.
3. 14 federal Universities, for a start, should be selected by the federal government as Group one Universities for special funding to expand capacity for 50,000 students each [We propose ABU, Bayero University, University of Jos, University of Maiduguri, University of Ilorin, University of Agriculture Makurdi, UI, OAU Ife, University of Lagos, University of Benin, University of Port Harcourt, University of Calabar, University of Nigeria Nsukka, Federal University of Technology Owerri.] :
i. Expand classrooms, studios, theaters, laboratories, libraries, and workshops for 50,000 students.
ii. Build decent hostel rooms for 50,000 students-( one-person rooms; two-person rooms; and three-person rooms. Students shall pay economic rates for those rooms if they choose to reside on campus).
iii. Recruit qualified University professors and lecturers both from within and without the country to achieve an initial ratio of 1:20, which shall gradually improve to 1:10. Thus, we shall require at least 2,500 lecturers and professors for each of the 14 group one Universities. That is, a total of at least 35,000 lecturers and professors.
iv. Equip libraries, laboratories, and studios with cutting-edge technology accessories and current journals and books, as well as consumables.
In order to reduce the number of non-teaching staff that shall be needed, students shall be hired in a Work-Study program to do some jobs on campus. Each University shall have such autonomy that will allow it to design and run its programs with the regular assessment of standards monitoring and enforcing bodies like the NUC and relevant international bodies. Lecturers and professors should be evaluated by students and sponsored for international and national conferences and paid competitive international salaries. Productivity of universities should determine amounts of support from government. Nigerian professors in the Diaspora who are not willing to return home, but are ready to be visiting professors should be tapped to teach summer schools and supervise graduate work at modest remuneration; and free furnished housing should be provided.
Admission to those Universities should be purely on merit. Only one list of admitted students should be released each semester (spring and fall). To be admitted, a candidate must score at least 200 points in UME (UME scores should be valid for 4 years) in addition to at least a B grade (example, 75 percent) in each University’s computer-aided examination, which should include thumbprint data in order to detect cheats. Scholarships should be performance-based.
Those 14 Universities together would take 700,000 students. Graduate programs in the universities must be sufficiently funded to produce scholars with higher degrees to support faculty needs in the country. Those Universities must sell themselves to industries and organizations for supplementary funding. The remaining federal Universities will still get federal government funds, and based on their research outputs and productivity (benchmarked in advance), can be elevated.
Besides, targeted investments will be made in federal high schools for better results. Continual training of teachers and staff will be done in partnership with relevant Education colleges within Universities. The federal government will show example by patronizing our Universities for solutions to problems of national consequence, rather than having to always bring in “foreign experts” for every problem and then idly “challenging” Universities, like Yar’Adua has been doing recently. I must urge him to desist from humiliating himself and ridiculing Nigeria the way he has been doing recently. The recent cases at UI and OAU Ife are germane examples. Yar’Adua has no executive right to disparage Nigerian universities and their professors when he has not used his executive powers to provide the requisite infrastructure, funding, and needed motivation. Yar’Adua gets a monthly “hardship allowance” of N1.7 million, but he does not know what amount is needed to remove the academic hardship our students and professors pass through in our Universities.
4. The National Youth Service Corp (NYSC) scheme should be strengthened. 37 orientation camps that can each take 1000 Corp members (1000 self-contained room-apartment buildings shall be built on each camp). Furthermore, modern state-of-the-art laboratories, workshops, multi-media rooms, cafeterias and libraries shall be built on each camp. Each batch of Corp members will spend 6 months out of the 15 months service period in camp for training and orientation in the sciences, technology, humanities, arts, and professional disciplines (a new service period of 15 months shall be enacted by the new NYSC act). Technocrats and experts in various fields of knowledge shall be sent to the camps as resource persons. The camping period shall serve to strengthen the bridge between University education and the real industry world. Cutting-edge research shall be done at those camps.
Funding will be partly from the Nigeria Youth Initiative Fund (NYIF) which shall be established by an act of the National Assembly, which will require one percent of the revenue from a barrel of crude or one US dollar from each barrel of crude (whichever is higher) sold to local refineries or exported (export of crude oil shall be stopped in the future) to be paid into the fund.
After the camping period and service year, Corp members who are willing will be given an interest-free loan from the NYIF for investment in a business whose plan must have been written, analyzed, and approved before end of camp period. Relevant Profession Corp Monitors (PCM) shall be attached to each group of Corp members to assist and monitor progress. Repayment of loan shall commence after two years. Social security documentation and provisional NYSC discharge certificates will be influential instruments for recovery of loans.
We have isolated power, energy, transportation, education, and Youth empowerment because those can bring about a domino effect in other areas like health and agriculture.
Nigerians, take your destiny in your hands.
Leonard Shilgba is the President of the Nigeria Rally Movement (NRM)-
www.nigeriarally.org
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