By SUNNY CHUBA NWACHUKWU
Sunny Nwachukwu (Loyal Sigmite), PhD, a pure and applied chemist with an MBA in management, is an Onitsha based industrialist, a fellow of ICCON, and vice president, finance, Onitsha Chamber of Commerce. He can be reached on +234 803 318 2105 (text only) or schubltd@yahoo.com
The petroleum pump pricing issue in Nigeria has defied the mechanism of the market. The price of petrol should actually be dropping from the present N165/litre if the relevant authorities in the country, over the years, had done the right thing; one of which is the provision of the needed power infrastructure in the sector. But based on where they have boxed the economy into – high inflation, poor productivity in the real sector (manufacturing sector), with a very epileptic GDP growth rate, added to the wobbling, very weak local currency, in terms of exchange rate, which started from the system lacking the supposed right infrastructure in the downstream operations, that should have been aiding seamless local refining activities within the economy.
These are practically not in existence now; and it is under this condition that the government finally wants to remove the monstrous petroleum subsidy. It is for this particular reason, therefore, that petrol is the wrong target to use; it is not even the next immediate best approach for the government’s planned funds generation for the economy. This is horrible for wealth distribution.
Another point has to do with the government’s transparency and accountability credentials for managing the proposed fund it wants to generate through this exercise. How does civil society monitor its application? Given the sensibility to raise such needed money by the government, what plan has the government proposed to the citizenry for its application when such money is eventually soaked from the general public; and the timeframe for the usage, failing which, the general public ought to hold the government accountable for such money in a democracy.
These are the actual symptoms that are known as matters of ‘can’t help’ in this government’s pathetic situation, prompting it to begin toying with the idea of increasing the pump price of petrol to N340/litre. Such a move would violate the actual economic mechanism of competitive pricing under a deregulated regime (of market forces) in a free, open market economy. It is very important for everyone to understand very clearly where the problem lies. Yet, there are feasible solutions out of this messy economic quagmire, in my humble view and calculation; because, the seemingly precarious scenario is momentous, it is not a permanent situation.
In an earlier piece, not too long ago, I had noted that, “In searching for the way to economic recovery, the solution to our self-inflicted economic challenges has to come from within. We must now hold the bull by the horns, if at all, we honestly and sincerely mean well for the Nigerian state to survive and succeed, economically. That could be done from among the 23 listed privately owned oil refining companies (with a cumulative daily output capacity of 1.09 million barrels), that have full approval from the Nigerian Upstream Regulatory Commission (NURC) and the Nigerian Downstream and Midstream Petroleum Regulatory Authority (NMDPRA), especially those of them that are readily functional to operate, and be aggressively engaged immediately, while the government still waits for further inclusion of the four facilities that are being rehabilitated.
“We are looking at meeting the daily local demand of PMS within the economy for now; for the simple reason that Nigeria has to be saved from this mess of an excess foreign exchange daily economic overload. It might be better that these private companies (including Dangote Refinery that might be starting a little longer by July 2022), benefit from their failure to meet up (having shown overwhelming readiness to refine locally. They are the real entities to be given SUBSIDIES on local refining; and the civil society will visibly see the pump price crashing below the present N165/litre, if adequate power supply is also made available for these local refiners, to power their productions. This wickedness against the state must stop!”
A strong point is also made in this statement by no less a person than someone who has served in the Nigerian cabinet as a senior minister. “The future millionaires and billionaires of Africa will not be coming from the oil and gas sector, they will be coming from the agriculture sector. But I want African countries to be looking at agriculture as a business, not as a way of life. Nobody smokes gas, nobody drinks oil, but everybody eats food. So food is critical and that is what Africa has a comparative advantage in.” That is a quote from Akinwumi Adesina, president, African Development Bank.
The above statement of fact needs acknowledging because, the oil industry has in the past, played its role, and significantly dictated the mode, direction and pace of the country’s economic well-being, growth and development. Records have shown the massive wealth created by the activities in the upstream extractive operations and exports of crude oil and gas; with evidences everywhere; not fiction, nor mere theoretical claims, but clear hard-facts, about such significant contributions the sector has made, and how it has impacted the life of the nation, with the global acclamation of Nigeria as an ‘Oil-rich Economy’. But where are we today, if you simply base an assessment on our currency exchange rate, which used to be N546 to $1,000 in 1980, but is now @ N546 to $1)? Your guess is as good as mine!
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