Random note taking in an orbiting world

Abubakar A. Nuhu-Koko, a researcher in petroleum policy and economics, is founder and pioneer executive director, The Shehu Shagari World Institute for Leadership and Good Governance, Sokoto, Nigeria. He can be reached on +234 706 330 6887 or aanuhukoko4000@gmail.com

Kyari, NNPC Ltd. and petrol price increase!

We are in the last two months (November and December) to the end of the year 2021 and beginning of the new year 2022. These last two months are the most harrowing months of every single year in Nigeria since the late 1990s.

The main reason being that it is within these last two months of every year that the prices of essential goods and services, particularly petrol or Premium Motor Spirit (PMS) and other fuels go through the roof!

My concern at this moment is not about the reasons and the consequences of price increases as we approach the Christmas and the New Year seasons. Rather, I am very much concerned with an aspect of the public policy dimension of official fuel price increase pronouncements over the years!

The basic and fundamental question is why should the NNPC (now rebranded and remodeled as NNPC LTD) be the public entity making such fiscal policy change pronouncements?

I believe it is the statutory responsibility of the Ministry of Finance and thus, by implication, the duty and responsibility of the Minister of Finance, Budget and National Planning to inform Nigerians of any planned or anticipated changes in Federal Government’s fiscal plans or policies and not the Chief Executive of the Nigerian National Petroleum Corporation Limited (NNPC LTD).

In the past weeks, Nigerians have been receiving different government’s policy pronouncements from the GMD NNPC Ltd, Mele Kyari, an engineer; and the Minister of Finance, Budget and National Planning, Zainab Ahmed, concerning what to expect with regards to pump price of petrol in the coming new year. This development is not right.

The government should speak with one voice and that voice should come from the appropriate office in charge of the government’s fiscal policies and matters – the Federal Ministry of Finance, Budget and National Planning and not the NNPC LTD. The NNPC Ltd is to implement what the Federal Executive Council (FEC) approves for the fiscal authority to announce. The NNPC Ltd is a business entity and not a public policymaking entity.

US, energy consuming allies, oil market!!                                                    

President Biden’s United States (US) government said it would release 50 million barrels of oil from its Strategic Petroleum Reserves (SPR) in coordination with China, India, South Korea, Japan and Britain to try to cool prices after OPEC+ ignored calls to pump more oil into the world oil market to slow down the rising price of energy in the G-7 nations, that is creating high inflation, social misery and unemployment, among other consequences (i.e., hurting and crippling their economies and social fabrics).

The action of the US government of releasing millions of barrels of oil from its Strategic Petroleum Stockpiles or Reserves (SPR), amounts to providing subsidy and interference with the free interplay of the forces of supply and demand that mediate the prices of traded commodities in the free world markets. This is the basic and general principle of a free market economy.

Paradoxically and ironically, however, the same US government, through its global free market enterprises policing authorities as represented by The World Bank (WB) and The International Monetary Fund (IMF), the twin brothers or sisters that regulate free enterprises globally, is forcing governments of developing and emerging economies not to subsidise their consumption of energy products and services. Nigeria is one of such countries.

Thus, the planned coordinated release of crude oil from the strategic stockpiles or reserves of these countries, could add about 70 to 80 million barrels of crude oil supply to the global oil market to ease the high price of oil and gas being experienced in the US and in Europe. This move is capable of bringing down crude oil price by about $2 a barrel from the $80 a barrel increase that occurred since late October 2021.

Paradoxically, fuel (petrol or premium motor spirit – PMS) subsidy removal has been the recurring decimal in all the previous and the present governments of Nigeria since the years of the World Bank/IMF Structural Adjustments paradigm shift of the mid-1980s (i.e., “The Washington Consensus”).

For instance, as recently as this month’s (November, 2021) during Nigeria’s Development Update (NDU) of the World Bank/IMF report and policy review, the World Bank/IMF asked the Nigerian government to remove petroleum subsidies!

Their reasons are because, “the poorest Nigerians do not benefit much from the subsidy regime” and that, “Nigeria is the only country in the world with a universal price subsidy that applies exclusively to PMS. Universal price subsidies for liquid fuels are almost regressive, as the rich consume far more fuel than the poor,” the report said.

And then; Lo and behold, the Federal Government of Nigeria is swallowing it, hook, line and sinker! For instance, both the finance minister, Hajia (Dr) Zainab S. Ahmed and Engr. Mele Kyari, the group managing director and chief executive officer of the newly rebranded and remodeled Nigerian National Petroleum Corporation Limited, have made numerous public pronouncements in that direction, just as President Biden announced the release of 50 million barrels of crude oil from the US Strategic Petroleum Reserves (SPR) as part of efforts to lower high oil and gas prices and address the lack of oil supply around the world.

Now, who loves his citizens best when it comes to the choice of lower fuel prices, between the G-7 countries and Nigeria in particular, and developing countries in general? Your guess is as good as mine!

Goodbye Merkel, welcome Scholz!!

Germany has finally got a new coalition government to be headed by a new Chancellor, Mr Olaf Scholz, after 16 years of Chancellor Merkel, the longest serving German Chancellor in modern history. A coalition of three parties led by the Social Democratic Party (SDP), the Free Democratic Party (FDP) and the Greens are now in control of the coalition government.

A new climate-energy-economy (including agriculture) super portfolio goes to the Greens. The Greens are in charge of the environment, climate protection and energy transition. These three pillars are very crucial in the deal that enabled the  formation of the coalition government. The other two parties share the rest of the portfolios, according to the latest information.

But noteworthy is that, emerging from the formation of the government is its green policy initiative, on which the coalition has moved very quickly and agreed to fasttrack the country’s renewable energy mix from the target of 65 percent in 2030, set by the previous government, to 80 percent by 2030. And that’s getting down to business for serious governments.