Counting the costs of our badly managed economy (2)

Sunny Chuba Nwachukwu

Nigeria’s on-going refined products import operation has always been without any reasonable rethink and conscientious arrangement to reduce or stop it through local refining. Whereas all the four existing refining plants, with a cumulative daily capacity throughput of 445,000 crude oil, have been more or less, unproductive and non-performing, the continental ‘giant’ still consumes these imported refined petroleum products unperturbed on a daily basis; before COVID-19 struck!

These are products the economy is graciously and divinely endowed with, a natural resource that ought to be comfortably and conveniently processed locally with added value, to make the economy self-sufficient and be a net exporter of this all important and essential product (PMS). Instead, we mindlessly, without any thought for tomorrow, keep exporting the crude at only about a tenth of its processed value worth, thereby losing fortunes that ought to have been conserved.

The present heavy financial load and pressure on the foreign reserves (that has equally made us to recently go borrowing for other projects), for daily purchases of imported PMS, in the light of the tumbling crude prices, has kept the economy under indefinite stress and uncomfortable panic mode. This observed situation alone indicates that the economy is obviously drifting gradually and continuously, into a recession in this COVID-19 era.

This ugly economic experience is the same way and level that the richest, global oil producing Latin American nation, Venezuela, took; and is currently passing through terrible times economically!

I’m beaming my searchlight hard on the oil sector because, from existing historical economic records, the sales of crude oil, since 1958, is where Nigeria has constantly been making approximately 90% of her export earnings; so this discussion on oil and gas sector should not be treated with a wave of the hand. Has anyone ever wondered why the national annual budget of this nation has always and constantly had crude sales price as the benchmark? The economy should be fair enough, not to ignore her major source of sustenance and revenue/forex earnings. This is the only reason I will continue to remain an advocate and keep talking about this ‘bird in hand that’s worth more than millions in the bush’.

Import substitution policy at the downstream subsector of the Nigeria’s oil and gas industry is the way to go. The economic policy to reduce imports by local refining, will not only benefit the economy through growth but will further strengthen our domestic market by reducing cost of the refined products, to become affordable for the citizens. It also goes extra length to improve social habits and standard of living amongst the middle income class.

Today, another embarrassing fuel pump-price hike @ N143 from N123.5 has come to bear! What a country, with all the comparative advantage we have over other nations on this particular product? These refineries can refine domestic aggregate supply of finished products that can promote and spark off healthy competition among players in the sector, for a healthy and progressive economic growth. Instead, we keep sabotaging the economy because of selfish interest, by insisting on an unending importation, rather than reversing the trend of exporting jobs to nations that do not even have this crude oil, to refine for us, while our teeming youths are all over the job market, unemployed! Federal government, as a matter of urgency, create more jobs by making many more local refineries operate within this economy! On this, we might need to borrow a leaf from Singapore, which has no crude oil, but employs roughly 50 percent of its people in the country’s numerous refineries within its economy.

In counting the costs of our poorly and badly managed economy on this note, I want to suggest to the federal government, now that it has dawned on us to wipe off petroleum subsidy on this same products we have been importing for years; and have also accepted to deregulate the sector to encourage investors to have a conducive and level playing ground with incentives, through attractive and special rate of sourcing crude for local refining for the numerous upcoming and prospective modular refining plants, I want to finally direct the attention of the FG to reflect on a strategy of possibly, developing and adopting our own indigenous mode and method of refining crude, by specifically advancing and deploying this project through Research & Development.

We need to study the processes of these illegal operators at the creeks, and scientifically see how we can improve on their simple heating methods, so as to achieve scientifically acceptable standard products. It is better to try out that option in a legitimate manner, than the wicked operation of the current imports of “dirty fuels” from European countries by some unscrupulous products importers. These dirty fuels have been identified to be polluting the environment and also damaging vehicle engines.