Nigeria’s decision to start the tracking of refined petroleum products movements across the country is expected to solve some few niggling problems arising from the current chaotic fuel distribution system, but it is hardly the most urgent need of the ailing and rotten oil and gas sector at the moment. The Minister of State for Petroleum Resources, Ibe Kachikwu, who announced the new development, said a whopping N17 billion had been approved for the installation of the tracking mechanism. “We will monitor the trucks till they deliver the products into the storage tanks for the filling (petrol) stations and they are discharged and sold. So, that will produce a 100 per cent holistic monitoring of these products,” the minister explained. But is that what a government should spend its time doing when there are so many challenges waiting to be dealt with?
Apart from ensuring that the refined products, which are almost 100 per cent imported these days, do not get diverted to Nigeria’s neighbouring countries, as claimed by officials of the Nigerian National Petroleum Corporation, it will also help to throw new light on the quantity of fuel that is actually consumed in the country on a daily basis. This has been a source of heated controversy between the state oil firm, which is now the sole importer of refined petroleum products, and other stakeholders, and rightly so.
At a time when there were private sector participants in the import business, Nigerians were told the country was consuming between 30 million litres and 40 million litres of petrol per day. But when the NNPC became the sole importer, paying itself subsidies – which it now calls under-recovery – the quantity has been inflated to as high as between 70 million and 80 million litres per day. More bizarrely, the quantity actually seemed to have reached its peak at a time when there was petrol scarcity all over the country, fuelling suspicion of deliberate inflation of figures because of the higher subsidies that come with higher figures.
While it is good to get the statistics right and ensure that whatever fuel is imported with Nigeria’s hard-earned hard currency is consumed only by Nigerians, it is however worrisome that the process of installation of the mechanism will be administered by the government, using the Petroleum Equalisation Fund, an agency that is not only redundant but part of the anachronism that obfuscates transparency and inflates cost within the oil sector.
According to the Act setting up the fund, its main function is to oversee “the reimbursement of petroleum marketing companies for any losses suffered by them arising from the sale of petroleum products at uniform prices throughout Nigeria.” The question then arises, if garri or bread or beef or cement, for instance, is not sold uniformly across the country, why must petroleum products be sold “at uniform prices throughout Nigeria”? What is so special about petroleum products that they should be singled out for this kind of treatment?
This is one of the reasons why the government should let go of the downstream sector of the oil and gas industry. If market forces are allowed to prevail, most of the problems within the sector would most likely be resolved and it will no longer be the business of the government to invest taxpayers’ money to the tune of N17 billion in the tracking of fuel tankers nation-wide, or to even fix prices in the first place. Besides, what happens to the fuel depots and the pipelines that should carry the fuel instead of the tankers? Why can they not be fixed if they are out of order, instead of relying on trucks?
For the umpteenth time, the government should be reminded that it has no business remaining in business; leave business for the businessmen and concentrate on providing a level playing field through the provision of sound infrastructure and rigorous regulatory authority so that businesses can thrive and buoy the economy. This is the only way to boost industrial base, create jobs and widen the tax net.
There is no doubt that the new proposal by the oil minister is an attempt to further entrench the government in an industry that it has been running for close to five decades now without bringing any benefits to Nigerians. This is why the government has found it difficult to sell the moribund, loss-making refineries into which billions of dollars are sunk from time to time on the pretext of carrying out turnaround maintenance.
It is sad that, with less than one year left in the life of this administration, not even one new refinery has come on board to take the pressure off the huge foreign exchange spent on fuel imports in the country. All the initial promises of Kachikwu to sell the refineries have come to naught. With the exception of the N273.74 million profit recorded in May 2016 and another trading surplus of N16.72 billion in February and March this year, the NNPC has been running at a loss for years. A report by Business Confidential put the amount of losses incurred by the NNPC in the three years to 2017 at a whopping N547 billion. No rational being runs business in that manner.
Given the track record so far, it is doubtful if anything good can come out of the Nigerian oil industry as long as it continues to be dominated by the corrupt government-owned monopoly. Nigeria can make all the money it requires from the oil industry through tax and royalties, without getting directly enmeshed in a business where there is no transparency and accountability.
We have consistently recommended root and branch reforms of the downstream sector that will target private investors and free government completely from the hydro carbon distribution business. In a deregulated environment, oil marketing companies can fully track, trace and monitor the distribution of their products and quickly detect illicit activities that negatively impact on their bottom lines. What the sector needs now is a complete overhaul that will position it to deliver maximally to Nigeria as a major oil producing country. It is time to clear the coast for the private sector to come in.
