Ensuring Adequate Fuel Supply Before Dangote Refinery Berths
The persistent fuel crisis Nigeria has been made to undergo reflects the curse which oil has become to an oil rich country; in fact, the sixth largest oil producer in the world. That curse shows glaringly in the paradox that such an endowed country almost wholly depends on imported finished fuel products for driving its energy needs. Yes, the country has drunk full from the blessings from oil. Oil has yielded bountifully since it was discovered in commercial quantity. Oil has yielded rich harvest to a country that is equally blessed with other resources. But from all indices, oil has rather led to a harvest of tears and regrets as its discovery marks the abandonment of other resources in preference to the effortless mining of oil and the huge payoff that comes from crude. How best to show this than that before the advent of oil, Nigeria was running very efficiently as an agricultural nation where cash crop was the source of an efficient system that benefitted the people and added greatly to the country’s infrastructural base, but has been abandoned in the craze for oil wealth?
When oil came, Nigerians changed focus, abandoned agriculture and other income sources and all attention was diverted to oil, with its rich harvest of petro dollars. Curiously, as oil gained traction and indeed, transformed into the nation’s sole revenue earner, corruption blossomed, development stymied and the mass poverty increased. With oil as the country’s sole revenue source, the directive principles of state policy assumed a deadly tenor as the struggle to corner oil resources came to define governance, politics and relationship between the combustible ethnic units that make up the country. With oil, deep fissures and divisions emerged not only between the various people that make up the country but between the classes as closeness to oil came to define the strata of the society.
Oil seemed to have funded only the huge corruption complex that came with it. With the government fixated on sharing oil revenue, other sources of revenue were allowed to go extinct and a social system that calibrated the citizens along the oil chain emerged. Attachment to this chain became a defining charter in our national scale as oil gained importance in the international commodity market. The stupendous rise in the price of oil added to the problem as Nigerians struggled to get attachment to its high yielding chain. But these never transformed to the wellbeing of the people. What more, there was no noticeable improvement in the oil process. There was no noticeable indigenous input in the sector. The exploration and mining were wholly outsourced and left in the hands of expatriate companies and the modest state investment in refining either for local use or even exportation was not improved upon. What rather emerged is a cache of indigenous petrol importers and marketers who exploited the helplessness of the Nigerian people to grow exceedingly rich merely by fiddling with imported petroleum products. Curiously, they made no attempt to plough back the illicit wealth they got from this mindless exploit to the development of the sector.
The above scenario has been grown and allowed to blossom for many years now to not only make Nigeria wholly dependent on imported fuel but susceptible to the tempestuousness and vagaries that follow the international oil market. The crux of the matter is that refineries built by past military regimes have been allowed to rot away by successive governments before the advent of the present regime who have recovered some chunk of their operational capacity to ease what would have been a very messy situation. At a fully operational refining capacity of 450,000 daily, the existing refineries fall hugely short of the petroleum needs of Nigeria at present. Yes, they were built for the needs of the country at the time they were built but there was that inherent supposition that successive governments would be adding to them as the needs of the country blossom with expanding population. But nothing of that sort was done for decades now. Rather, as the corruption complex around the oil industry quadrupled in leaps and bounds, these refineries served as conduits for multi-billion Naira looting in the guise of unending turn-around maintenance contracts that never improved their lots.
As the refineries were used for massive stealing, they rotted away till they became inoperable scraps from which the present government has battled to recover some appreciable degree to support the local fuel demands. Because successive governments found it so attractive to depend wholly on imported finished products, no efforts were made to either rehabilitate the existing refinery or add new refineries. What more, fuel importation became a huge cash cow and a flowering corruption font for enriching sundry interests by successive governments. This paradoxical state where Nigeria, as the sixth largest oil producer on earth, became the largest net fuel importer gradually grew and with it, a gargantuan corruption that soon over swept the entire country and became the main business in town.
Because the fluctuations in the international crude market was bound to affect this dependent regime, it was impossible for fuel importers to consistently fiddle with fuel prices as crude prices fluctuate as this was bound to unleash chains of unpalatable social crisis, the government will have to subsidize imported fuel prices for there to be a stability in prices. This was what led to the notorious subsidy scheme, which itself became another huge cesspool of fleecing the country and expanding the frontiers of corruption. Subsidy, as a policy, would have been a non-issue if Nigeria has optimal refining capacity to ensure adequate supply of refined petroleum products for its expanding populace. The existing refineries were designed for a population of between 50 and 60 million, at optimal operation capacity. With our population at over 180 million, there is no doubt that the existing refineries, even if they were operating at full capacity, would merely meet the needs of a little fraction of our population. So there was need for regular maintenance of the existing refineries to keep them at optimal level while building new refineries for Nigeria to meet her local fuel needs but these imperatives were all abandoned and Nigeria made to depend on imported fuel. So subsidy would not have happened if Nigeria had full refining capacity and crude supplied to these refineries at tolerable local price.
So, the Nigerian oil industry was converted to a huge corruption complex and the ordinary Nigerians were structured as the ultimate brunt bearers and financiers of this massive corruption. Over the years, the corruption has been deepened. Since President Buhari came to power, there has been decisive actions to unhinge this deeply rooted corruption and this led to the expunging of the hugely corrupt subsidy regime that was so manipulated to corruptly enrich many interests that are attached to those in power. But then, without local refining capacity, it would be difficult to control the price of fuel without somehow, subsidizing the price of imported fuel in the midst of global fluctuation in oil prices. That is why we are having the supply glitches we have been having since December and the government should be bold to address it.
Methinks that a highly controlled and transparent subsidy regime, not the scrambled corrupt subsidy scheme that existed before Buhari came, would be in order. The present government should weigh in with a transparent subsidy regime that takes care of the rise in petroleum products to ensure that the present price regime is not tampered with. There is nothing wrong with a transparent subsidy process. Why Nigerians were against the subsidy regime before now was because of the widespread abuses and total lack of transparency that attended it. It got to a point the immediate past government paid a whopping N2.1 trillion as doubtful subsidy to oil marketers without corresponding supply of imported fuel. With the vastly improved transparent culture this government conducts its policies, I believe it can enthrone a transparent and open process of subsidizing imported refined products so as to ensure that Nigerians are not subjected to the whims and selfish caprices of hawkish petroleum importers.
All said, the tremendous promises of the Dangote refinery, which promises to start operation next year, should gladden the hearts of Nigerians that somehow, a Nigerian has come to the rescue from many years of official ineptitude and corruption. The Dangote refinery is expected to end this cyclical embarrassment of total dependence on petroleum products and the businessman needs commending for this giant intervention. Is it not curious that the many other people that made huge gains from the corrupt twists in the petroleum industry never deemed it proper to invest the loot they got from the oil sector into developing the sector as Dangote is doing? He deserves our kudos but before his refinery comes on steam, the government must develop a supply template to keep the product available to Nigerians while not increasing the price to reflect international crude pricing. The only option is a transparent subsidy regime that will take care of the difference between the present landing cost of imported fuel and the existing controlled price of petrol. There is no way out of the crisis than this.
Peter Claver Oparah
E-mail: [email protected]