The Removal Of Oil Subsidy: A Challenge To A Nation

caption: Senator Babafemi Ojudu

Being text of a speech delivered in Akure on 13th of December to mark the week of Nigerian Union of Journalists, Ondo State Council.

Mr. Chairman, distinguished members of the Nigerian Union of Journalists and members of the public here present, it gives me pleasure to be here in your midst in Akure. This city once served as the political capital of our beloved old Ondo State and I have fond memories of it. Moreover, Akure has a prominent place in my earliest beginnings as a working citizen. It was here that I got my first job at Toyin Bookshop as a sixteen-year-old fresh out of secondary school. Although I was a bookseller for only a week, I left for a clerical job in the Ministry of Education also here in Akure. Since I am addressing fellow journalists, permit me to add that it is also in this city that I did one of the most investigative reporting of my career. The story, for those of you who may have been practicing then, was titled, “The Scandals of An Era”. It was about a wasteful project of Navy Captain Olabode George, military governor at the time of the then Ondo State. His regime is remembered today for the tasteless fountains built in markets and open squares without running water. The wheels of justice, they say, move slowly. More than two decades after this exposé, the central character in that Era of Scandal was convicted and jailed for thefts in another theatre of scandals, the Nigeria Ports Authority. But I digress.

As citizens, be you a journalist, doctor, lawyer or farmer, whatever your calling, you must at all times speak the truth to those in positions of authority. As journalists nothing will erode our hard earned reputation faster than to fall for anything, especially in a time like this when bootlickers abound like the sands on our unpaved roads. I am here today to speak on the current debate on the issue of oil subsidy. I will be upfront with my position, which I should like to preface with this poser by the English writer, George Eliot, “What do we live for if it is not to make life less difficult for others?” Before giving you the details of my own position and the position of most Nigerians who do not belong to the cabal holding us down and raping us, let me start with the official argument and logic trumpeted by the few who believe that there is an oil subsidy and that without its removal Nigeria will collapse.

President Jonathan is today trying very hard to convince Nigerians of the need for the removal of fuel subsidy. In fact, he has all but declared the ability to make the idea look attractive as the yardstick for measuring the performance of Ministers and Presidential aides who have seized every opportunity to tell us that it is in our best interest. You may want to ask why the Federal Government insists on selling the idea of subsidy removal when it is so clearly a case of trying to sell a refrigerator to an Eskimo. Well, government says it does not want to become broke by continuing to subsidize fuel. Petrol presently sells at N65 per litre but that is not the price of importing this essential product, the government says.

According to statistics from the Petroleum Products Pricing Regulatory Agency (PPRA) and the National Bureau of Statistics, to get petrol to Nigerian ports costs N117.74 and because Nigerian ports are grossly inefficient, an additional cost of N6.25 per litre is incurred. The petrol is usually stored at the ports; it is not transferred directly from the ships to the trucks and so the ports charge N3 for storage and an administrative cost of 15. There is a bridging fund of N3.95, and then dealers would add their margin of N1.75 per litre. The transporters add their own margin of N2.7 while filling stations in turn add a margin of N4.60. So, they argue, the cost of fuel at the petrol stations should be N138.19 per litre, (approximately N140). And because it is sold for N65.00, the Federal Government pays the shortfall of N75.00 or thereabout on every litre. This extra N75.00, called a subsidy, is what the government says will make Nigeria broke if it — that is, government — does not stop paying it (subsidy) forthwith.

On the average, Nigerians use 294,000 litres of fuel per day. The four refineries in the country which currently operate at 21 percent capacity provide 93,450 litres daily, which means that an additional 200,550 litres is imported to meet the domestic need. If you multiply this by the N75 so-called subsidy, it is no doubt a huge amount of money, running into over N15 million daily. You can only imagine what it will be if multiplied by the number of days in a month. On the surface, then, it presents a strong case and we all ought to agree with the Federal Government on the removal of the “subsidy.”

But is this the whole story, the true picture? It most certainly isn’t. We need to ask ourselves, has it always been like this? How did we get to the present sorry state of exporting crude and importing refined petrol? Even more important is the question, how will Nigerians fare if we have to buy fuel as from January at N140 per litre? What, in any case, is the purpose of government? Why do we enter into a social contract known as government, thereby entrusting some of our individual rights and freedoms to it, if not in the hope that government will exercise power as a trust to advance our collective freedoms and welfare, thereby making life better for us all?

Oil was first discovered in Nigeria in 1956 at Oloibiri in present day Bayelsa State. That is about 56 years ago, a few years before Jonathan was born. Why, many may want to ask, haven’t we been able to build and maintain fully functional refineries since then? Other oil producing countries, like Libya, refine their crude oil; Venezuela doesn't export a drop of crude. Why does our country continue to export crude oil to countries that would refine and sell it back to us at higher prices? Is it because our leaders do not know that there is added value in refined oil? They certainly do know. Why then have they not been able to ensure that the existing refineries work or tried to build new ones? Is it because of the existence of a powerful cartel that profits from Nigeria’s continued underdevelopment , a cartel that the government openly or tacitly supports? Indeed, is it because key officials of past and present governments are part of this cartel? We can continue to ask questions, but I think Nigerians know most of the answers.

It is the same story in the power sector where billions upon billions of dollars have been spent without tangible results. On the contrary, the funds always seem to end up in private pockets and foreign bank accounts. In a matter of days, President Jonathan will give us a prized new year present. That, as you are all aware, will be the new price of N138.19 (approximately N140) per litre of petrol. This will be more than double the current price.  What will be the implications for citizens and the economy? According to available statistics, Nigerians generally spend about 63.8 percent of their monthly income on food and about 4.2 percent on transportation. If petrol sells at N140, transport fares would definitely double to 8.4 percent of monthly income. Prices of food items would increase since increase in fuel prices means increase in the prices of virtually all goods and services. That means more than 63.8 percent of the monthly income would be spent on feeding. What then would be left for housing, electricity, hospital bills, and tuition fees, not to mention other cares, one of which is meeting the needs of the extended family? As you know, for every employed adult, there are legions of siblings, nephews, nieces, cousins and aged parents who look up to him or her, especially when our country has no social security scheme. And this is why we must put politics aside and commend the Ekiti State governor, Dr Kayode Fayemi, who has instituted a social security programme for the aged. At least, this will take some burden off their children or relations.

Now, what assurance do we have that once Jonathan removes the so-called subsidy landlords will not increase rents when they have families to feed too? PHCN, schools, hospitals and other employers might want to pay their workers more to enable them cope with the even higher cost of living sure to ensue. This, of course, would mean increased school fees, electricity tariff, hospital bills, etc. This means that many tenants will receive quit notices from landlords eager to defray their own cost of living. More children will drop out of school owing to their parents’ inability to pay their tuition fees. More of the sick will die at home or in hospitals because they are unable to afford hospital bills or medicines as food takes priority. After all, we must eat to stay alive; to keep body and soul together. More of the few industries still able to keep their factories open will lay off workers or completely shut down as the cost of fuelling generators makes manufacturing unprofitable. Many of you journalists may have to work without pay or become unemployed as the cost of running media houses becomes too big a burden on their proprietors. Needless to say, circulation which is already at a miserable level, would drop even more drastically because the disposable income of the citizenry will have shrunk to the point where only basic needs, such as garri and kerosene, can be afforded.

It is true that the Federal Government has promised to spend the money realized from the subsidy removal on mass food production, construction of roads, education and health services and also to increase the minimum wage. We have heard that story before. What would any increase in minimum wage amount to in the face of a hundred percent or more increment in prices of goods and services? What happens to those in the private sector? What if their employers refuse to increase wages? As we all know, all businesses run on diesel fuel in Nigeria. This means that a lot of small businesses might not be able to cope and they would fold up. This will throw millions more into unemployment market. Even big businesses will be forced to downsize, thereby increasing the already unacceptable rate of unemployment which government has put at about 21.1 percent, but which we all know may be three times higher.

President Jonathan states emphatically that a government must take a stand. But at what cost, Mr. President? High officials of government would definitely be able to afford fuel at N140, but what about the masses? Should they suffer for the inability of government to ensure that our refineries are fully operational? Should Nigerians be made to pay for the ineptitude of their leaders and the kleptomania of government functionaries? Is it a crime to be a citizen of a country that is abundantly blessed as Nigeria? Why do Nigerians have to continue to suffer for the lack of vision of their leaders?

At present, the four refineries in Nigeria operate at 21 percent of their total capacity and produce 93,450 litres per day. If they run at only 66 percent capacity, they would produce more than the 294,000 litres needed domestically. You may ask, “Why can’t government make the refineries fully operational? This is the question all concerned Nigerians should be asking the government. And we should demand an answer to it.  Just last week, a Nigerian newspaper published on its front page the photograph of a new refinery in Niger Republic. The refinery is located next to our border post in Borno State. I challenge every one of you journalists present here today to go and find out who the investors behind this modern refinery are. I am willing to bet that other than the land on which it is built, you will discover that every pipe and bolt is paid for by Nigerians with our stolen resources.  They will collect the so-called subsidy and then hop across the border to buy refined fuel and bring it home to sell to us. It is an open secret that across West and Central Africa are modern, functioning refineries owned by powerful Nigerians and that it is from these places they will bring the “unsubsidized” fuel to be sold to us at an unaffordable price as from January next year. But we must not let this happen. You may have heard the story of one of our former leaders who, while in office, built a refinery in Jamaica and fed it with free crude from Nigeria for almost three years before leaving office. He then imported and sold to us the refined fuel subsidized by our government, that is, with our collective resources. This is another story you may wish to investigate as part of your duty to hold government accountable.

The foregoing makes it clear why our refineries are not working, why we are unable to build new ones, and why we continue to talk of oil subsidy removal year after year. For the eight years Olusegun Obasanjo was in power as civilian President, he increased fuel prices about three or four times, all in the name of removing the so-called subsidy. Apparently, this subsidy is elastic and inexhaustible — the more you remove, the more it increases! Successive governments have failed to explain why the refineries have remained comatose despite the huge amounts of money that have been spent over the years on Turn Around Maintenance (TAM). Is it not shameful, ladies and gentlemen, that a nation with the enviable position of the sixth largest producer of oil has the dishonour of being one of the highest importers of petroleum products? As at October this year, the government is said to have spent over N1.3 trillion on subsidy when the budgeted amount was less than a half of that sum. In a sane country, the President would not be sitting pretty at his desk after wasting such a huge amount of unappropriated funds; he would instead be facing impeachment proceedings. But this is Nigeria where anything goes. So where have all the moneys spent on TAMs and “subsidy” gone? To the vaults of foreign banks, the acquisition of mansions in western capitals and sea side resorts, and the hundreds of private jets that are to be found at airports across the nation. When next you hear one big man asking another how his PJ is performing, know that the two are not talking about pyjamas — the  mere night dress we all refer to by those initials — but about their exotic private jets, the Gulf Streams and other flying wonders most probably bought with subsidy funds.

But to return to the cost of fuel, may I inform you that in Iran today petrol sells for an equivalent of N58.40, N30.66 in Kuwait, N32.12 in Qatar, N17.52 in Saudi Arabia, N54.02 in the United Arab Emirate and N15.95 in Libya. And yet our leaders lie to us daily that the N65 we pay is the lowest in the world. And again, I will repeat the words of George Elliot: “What do we live for if it is not to make life less difficult for others?”

An audit report of the activities of NNPC which recently surfaced on the internet painted the corporation as a bazaar where contracts for the importation of products are routinely awarded without regard for approved guidelines and procedures. “We observed that contracts for the importation of petroleum products were awarded to companies and suppliers not listed in the approved pre-qualification list used for the fourth quarter 2008 importation,” it says. The auditors report that among other forms of misdemeanour at NNPC were poor accounting and shoddy record keeping. The auditors also indict the corporation for “leaving its own storage facilities unused and then proceeding to incur additional cost from leasing of third party storage facilities.” The DPK tanks with storage capacity of 18,000 cubic metres at the PPMC depots within the Mosimi area had not been used for three years, even though they are in good condition. The cost of leasing third party facilities is passed on to the government and entered as a subsidy in the books. We know the owners of these storage facilities. They are the people in the boardrooms of NNPC, some elements in the corridor of power and their friends and girl friends.

At his inauguration barely seven months ago, President Jonathan assured Nigerians thus: “I know your pains, because I have been there. Look beyond the hardship you have endured, see a new beginning, a new direction, a new spirit.” And now I ask, Is this the new direction, the new spirit, he enjoined? Here is a man who during his campaigns spoke openly of his humble beginnings. He even made a song of his poor boyhood: “In my early days in school, I had no shoes, no school bags. I carried my books in my hands but never despaired, no car to take me to school, but I never despaired. There were days I had only one meal, but I never despaired. I walked miles and crossed rivers to school every day”. I have come to the opinion that the President’s words were nothing but empty sloganeering intended for electoral purposes.  For hear him strike the populist note again: “I am mindful that I represent the shared aspiration of all our people to forge a united Nigeria: a land of justice, opportunity and plenty. Confident that a people that are truly committed to a noble ideal cannot be denied the realization of their vision, I assure you that this dream of Nigeria that is so deeply felt by millions will indeed come to reality”. In the light of his determination to heap even more unbearable suffering on the people, the President’s sentiments ring hollow. How is it that a President who only yesterday regaled the country with tales of a humble childhood marked by poverty can so suddenly turn around to pursue policies sure to worsen the already dire poverty of millions of his fellow citizens? The question history will certainly ask him before long is why implement a policy guaranteed to further impoverish the people?

Herman Melville, author of the classic American novel, Moby-Dick, said that equality brings “democratic dignity”. The obverse is that inequality breeds human indignity. It is my view that inequality, together with corruption which partly causes and aggravates it, constitutes the twin bane of Nigeria and inform the pessimism of the people. The gap between the rich and the poor is so large now that it is alarming, and this is due mostly to the irresponsibility of government. The people justifiably blame government for their frustrations and pains. Countless promises to improve their lives have been made and wantonly broken. Consequently, government in Nigeria is seen as legitimised fraud sustained by deceit and manipulation, so that even when it speaks the truth the citizenry take it with a pinch of salt. It is a tragedy, but can we blame the people? They have every reason to be suspicious of the “good” intentions of government.

The strongest justification for the removal of the so-called oil subsidy is that the funds accrued from the action will be channelled towards infrastructural development. Of course, we have heard this story before. Not once, not twice; not even thrice! What development did previous “oil subsidy removals” bring to the long suffering masses? None whatsoever! I know that no amount of “sweet talk” by President Jonathan and his praise-singers can mitigate the actual suffering of the people or dispel the fears of keen observers of the parlous state of the economy. But in periods of economic disaster, when the needs and welfare of the vast majority were threatened, how did responsible governments in other parts of the world respond? I read as a student about the Marshal Aid Plan which was designed to save Western Europe immediately after the Second World War. During the great depression, a responsive government headed by President Franklin Roosevelt came up with the New Deal. Ditto for Harry Truman who devised the Fair Deal to mitigate the hardship and challenges that assailed the American people in his time. Responsible leaders strive to build a society where all can be happy. Unfortunately for us, the vast majority of Nigerians have had to grapple with pains gratuitously inflicted on them by their own government. Both the weak and strong can live happily where government is determined to ensure their welfare. Such a society is possible but requires vision, prudence and the courage to build it to the applause and admiration of all.

As a young secondary school student in the 70s, I used to read monthly journals from Communist China. In page after page of those journals, I saw uniformed Chinese men and women in rice farms balancing two baskets on their shoulders with sticks. China was then a nation of peasants and mostly poor people. I recently returned from a two-week trip to China and could not believe what I saw. Is it the advances in road construction or the efficiency of their transportation system and the skyscrapers of housing projects that dot almost every available space? Virtually every block has a manufacturing concern. They have just built a fast train that can travel at 400 kilometres per hour. That means that you can make the trip from Lagos to Abuja on this train in less than two hours. It also means that you can live in Ado-Ekiti and work in Lagos; it would only take you one hour to commute daily. There is nothing under the sun that is not manufactured today in a China that was a peasant economy some 40 years ago.
Proverbs 29, verse 18, says, “Where there is no vision, the people perish”. The trouble with our country today is that we have leaders who have no vision. That is why our nation has everything and paradoxically lacks everything.

I am of the opinion that if the government presses ahead with the planned removal of so-called subsidy, then the action would be contrary to justice, good conscience and sound policy. I believe that the action will only result in greater misery, in the further impoverishment of the people. I call on civil society groups, the Nigerian Labour Congress and its allies to position themselves to resist this thoughtless action. I will vote against it on the floor of the National Assembly and equally march against it with civil society groups if the need arises. We all know that poverty is on the ascendancy in Nigeria. This is unacceptable and calls for action. The vast majority of Nigerians live in indescribable squalor. This is the time for us all to engage in direct citizen action, in civil protests. As a Senator who is daily assailed by requests from my constituents, I know that family incomes are the best measure of our living standard. It is a painful realization for me that there is very little that I can do to salvage the hardship of my constituents but what I will never do is to fail to register my opposition to the removal of the so-called oil subsidy, knowing that it is a catalyst for sustained suffering and social inequality. The evidence shows that Nigerians are increasingly frustrated with the failure of government to relieve their suffering. They are perplexed that they remain the perennial scapegoats for government’s successive failure to do what is necessary. They see that it is they who bear the brunt of the years of the corruption and greed of those who occupy high office in collaboration with their contractor cronies.

How a government designs or handles policies which have the potential for serious repercussions for the majority, which is usually those at the bottom of the social ladder, speaks volumes for its intentions. Millions of Nigerians cannot afford good education. Neither can they afford good meals or decent accommodation. The masses of the poor are for the most part ill-clad and denied opportunities of escape from poverty due to one harsh economic policy or the other. Yet, Nigerians are not lazy. On the contrary, they are hard-working, dogged and selfless but what is missing are leaders of vision to aggregate their energy and put them to work for the greater good of the nation. This is the tragedy of the Nigerian nation and it is the duty of every citizen to speak against those who seek to perpetuate this unacceptable status quo.

I see so many Nigerians who live on incomes so meagre that I wonder how they survive, how they manage to stay alive. Duty and love of my country will compel me to vote against any attempt to further batter the body and soul of the nation. I will vote against the removal of the so-called oil subsidy without batting an eyelid. I will do so in the firm belief that in so doing, I shall be striking a blow against the conscienceless and irresponsible ruling elite. And I shall take it as special obligation beyond the ordinary to lobby my colleagues to vote against it. We must never aid any attempt to further brutalise and punish our people for the negligence of government and the greed of a few.

And yet, even though the prospects do not look good, we must not despair because of the irresponsibility and malfeasance that current prevail; rather we should renew our resolve to find a lasting solution to the failure of patriotic ideas, the shocking lack of love of country and concern for the welfare of the people, which has come to define governance in Nigeria. We all know that government is supposed to pursue objectives that would better the conditions of the citizens and not to make their lives unbearable. But I should like to say that a responsible government, in other words a government that is compassionate and that responds to the needs of the people, is possible in Nigeria. Permit me to end this speech then by quoting the thoughtful words of J. F.  Kennedy who said: “A society that cannot help the many, who are poor, cannot save the few that are rich”. The Arab spring has validated that assertion just like the evolving Occupy campaigns in the United States. In Europe, we have seen the fall of governments in Greece and Italy and the implications for all irresponsible governments is clear. The people can no longer continue to bear the burden of hardship by subsidizing the rich. Yes, ultimately, it is the poor who subsidise the rich.

Distinguished colleagues and friends, ladies and gentlemen, thank you once again for providing me with this platform to share my thoughts on an urgent national issue with you. I also thank you for your rapt attention. In closing, I commend to you the lesson of a song by Chief Ishola Adepoju, that great traditional musician who lived and died in this town:

Ayegbe O
Ayegbe
Ayegbe laiye O e
Use kiwo bamu oju o
Mo sayagbe sonu
Use kiwo bamu oju o
Mu ke keji re
Aiye mo ju nukan se o
Ayegbe.

Thank you and God bless.