Before you crucify me for the caption of this article I would like to make some things categorically clear. I am not in support of deregulation of the petroleum industry now. But I must say though that full deregulation is the solution to the various ills plaguing our corruption infested oil industry. The petroleum industry especially the downstream is plagued with too many irregularities that mentioning them here will take a whole day.
The then military rulers set up the Petroleum Equalization Fund (PEF) to serve the purpose of a particular section of the country because most of them were from that section.
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The purpose of the PE fund is to make petroleum products available at the same price all over the country irrespective of the distance to the source of the products. The real beneficiaries of the fund are not directly the major marketers as many erroneously believed but the transporters who transport these products to various parts of the country. Note that I used the word directly.
I worked for thirty years in the downstream of the industry before I became a casualty of Obasanjo’s privatization of the downstream. I was thrown out by Mike Adenuga with hundreds of my colleague without adequate preparation for the future. I spent substantial part of these years in the department where reconciliation for the PEF took place so I know what I am talking about. The beneficiaries of the huge amount paid out monthly by NNPC to the marketers as bridging claims are the Dangote, Chachangi, the Tinubu (not the former governor) and the Otedola of this world.
The full deregulation of the oil industry is the best solution to the wastage that abounds in the industry. I am not talking about the problem plaguing the upstream as that issue is another matter. The supervisory organization for the industry (the NNPC) is a nest of corruption. Every officer in that organization considers his/her pocket first before the country. Proper record of the PTF and even lifting from its refineries and depots are non-existence. A case in point when I was still in the industry will proof this assertion correct.
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In the year 1990, I was in charge of main product payments to the NNPC. Towards the end of every year, the NNPC reconciles the accounts of every marketer to determine their indebtedness to the organization. Knowing fully well the ineptitude of their staff to issues that do not border on pecuniary rewards that will improve their well-being, I deliberately understated our indebtedness to them by 50,000,000.00 Naira when they demanded for our reconciliation. When they sent their own reconciliation, I was stupefied when their figures almost tallied with the one I sent to them! The difference was less than 50,000.00 Naira. When I jokingly told a colleague who was in charge of African Petroleum NNPC payment what I did, he was not surprised as he had done this several times knowing NNPC penchant for slothful accounting. This is only a tip of the iceberg when the huge volume of PEF reconciliation that takes place every month is taken into consideration. The major marketers paid the transporters their dues and pocket the rest.
Huge volume of PMS is taken from Lagos to various part of the country everyday now that more that 75% of petroleum products consumed in this country is imported. It is a slap on our face that the fifth largest producer of oil in the world cannot refine their own products. The irony of this scenario is that most of the refineries that refine these products are owned our so called leaders who used our stolen wealth to establish those refineries that provides jobs for the citizen of those countries. What a heartless group of leaders.
I said deregulation is the pancreas to the ills plaguing our corruption invested oil industry. But before deregulation can take place, some things had to be put in place first. Deregulating the industry before those issues are tackled is like placing the cart before the horse which could result in disastrous consequence for those currently in power.
Many of our OPEC members now export refined petroleum products instead of crude. As long as we import our refine products, the price of our petroleum products would be subject to the vagaries of the unstable international oil prices. Our refineries have to be working at full capacity and more refineries built. Why can’t each state build their own refinery to refine their products? Why must product be transported to Kaduna from Lagos for which government would pay 10 Naira or more for bridging on each litre of fuel? This translate to government paying Dangote 330,000 Naira to transport a truckload of fuel to Kaduna before the product can be sold at the same price it sells in Lagos. This is wrong. Petrol cannot be sold at the same price it sells in Lagos if Kaduna does not refine the product. That crude oil sells for 150 dollars per barrel in the international market does not mean NNPC will sell to the refineries here in Nigeria at that price. What NNPC would do is factor in all its production cost in producing a barrel of crude which will then determine how much it will sell to the refineries. This does not mean it has to sell at a loss. Far from it.
It is only when we no longer source for our petroleum products from outside the shores of the country we can talk about deregulation. As long we still import our products, we cannot deregulate the industry else we wake up one day to discover to our chagrin that price of PMS has jumped to 200 Naira per litre.
Government were able to deregulate the prices of the other refine products namely AGO, DPK, ATK and LPFO without much fuzz because their impacts were not felt directly by the people. When the government finally deregulate the price of PMS without all these taken into consideration, all hell will brake loose.
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