October 22, 2009
For several years, the major oil marketers had been feeding fat on income that should accrue to the federal government in the name of bridging claims. Bridging claim is the cost incurred by the federal government when petroleum products are transferred from the depots or from the point of imports to other parts of the country to be sold at uniform price fixed by the government. For petroleum products to sell at the same price all over the country irrespective of the distance to the depot, the government set up Petroleum Equalization Fund (PEF) to take care of the cost incurred by the major marketers in transferring these products. This means if petrol is sold at 65 Naira in Lagos, it will be sold for the same price in Sokoto.
The petroleum marketers send the bill for transferring these products monthly to the PEF department of Pipeline Products and Marketing Company of NNPC (PPMC) every month as bridging claims. This claim runs into billions every month. The PEF connive with marketers by processing bogus claims sent in by the major marketers every month. I know this because the bridging claims section was part of the department where I worked for more than ten years before I retired from NOLCHEM now known as Conoil.
This so-called subsidy we hear about all the time was removed during the Obasanjo regime on all petroleum products except on premium motor spirit (PMS) which many of us know as petrol. The government did not withdraw the subsidy on petrol not because of his love for the masses but because of the crisis the move will engender. The Obasanjo regime left the incoming regime of Yar’Adua to carry the can.
As much as I sympathize with the Federal Government on this issue and believe deregulation is necessary, some things must be put in place before they can deregulate. Why is Nigeria the only country among all the other OPEC nations that still imports petroleum products? That this is happening five decades after independence is a big shame on the so-called giants of Africa. Many of OPEC members now export refined petroleum products instead of crude while we cannot even refine for our own consumption. What a disgrace!
The deregulation excuse the government gave that many of the licenses it gave out remained not utilized several years after issuance because of subsidy is not tenable. What stops government from building refineries in every states of the federation? What does the federal government do with its trillions of federal allocation? This in part is why there have been strident calls for deregulation of the federation. Fiscal independence of the states must be a reality before this nation can move forward. That the Federal Government is incompetent is to begin to repeat the obvious. Many of our companies are closing and relocating to Ghana but our government is not concerned. The 6000 megawatts promised in December will go the way of all other promises.
How the government intends to avert the monumental industrial crises that will rock this nation after is what is worrying observers of government deregulation move. The labour union even though had been silent for sometime will call on his members to begin on an indefinite strike. This strike will be a radical departure from the ones embarked on during Obasanjo regime when his government increased prices of petroleum products. This time the government is removing total subsidy on the remaining petroleum product: petrol. We are all living witnesses to what happened to prices of A.G.O and D.P.K. Kerosene presently sells at 150 Naira at the filling stations! Knowing the greediness of the major marketers, the price of petrol will go as high as =N=200.00. Forget the Federal Government argument that deregulation will bring down the price of the product. Price don't come down in Nigeria.
What alternative then is left to the government? Since deregulation is a forgone conclusion, government must increase minimum wages to at least =N=50,000.00. Minimum wages in Nigeria before Babangida introduces his poverty induced SAP was close to this. Any one who don't believe me should convert the minimum wages then to US dollars using the then exchange rate. Use today exchange rate to multiply what you get, you will be shocked by your discovery. Nigeria is the only country in the world this kind of thing can happen without the government being chased out of power.
Government should build more refineries or induce private investors to do so. Government is adept at doing this especially when it is going to benefit their party members or members of their immediate and extended families and friends. If we refine our products, the price NNPC will sell to the refineries cannot be tied to the international price of crude oil. Abiola got this right when asked how he would tackle the perennial
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