It’s very clear that we are not in a crisis, we just have economic managers who really are not interested in solving the problem. I just saw a report attributed to the Minister of State for Petroleum saying that fuel prices should be dispensed at above N1,000 per litre. The main reason for this, according to the report, is the rising smuggling across borders because of the relative cheapness of our own supplies.
This excuse is as old as Metuselah and has always been pooh-poohed by Nigerians. Why must we pay more because of your inability to rein in your own security forces who, according to you, are involved in the smuggling?
Sadly this time around, I think they are just trying to give an already rogue dog further bad names because this situation is far beyond the tankers being smuggled across the borders. This problem starts from that ‘subsidy has gone’ statement and now has spiralled almost out of control.
Since that day, fuel has moved from N179 to the N1,000 we are seeing today carrying with it inflation, which has hit the 40 percent mark with the erosion of the Naira. Let’s just say the economy has been hit by a tsunami leaving government with its hands on its head in fear.
The only thing very certain about this government now is its ability to ramp up its expenditure despite all of this and in its very strong belief that it can wrestle down discontent. We are beginning to see pressure from authorities on Civil Society, Labour is under siege and journalists are now in danger.
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As the economy grows worse, crackdown on descent will intensify as government continues to grapple with an economy that is spiralling so fast down the drain that it is scary. Now the main issue today is pump price of fuel and the Nigerian National Petroleum Corporation Limited hypocrisy in handling the matter.
You say you are whatever you have called yourself. Just now and you have declared dividends and in the same vein used the dividends to clear backlog and you still now after several denials now admit to owe dealers over $6 billion in back payments?
You are the main cause of the problem. The confusion you have thrown into the space due to your opaque mode of operation and indecisiveness have thrown a beehive filled with angry bees into the market. I do not think you have the independence you need to run as what you want to run and this is part of the problem
Your books are wonky, your decision taking is amateurish and your outlook posturing is bereft of the confidence the market needs to plan.
As for the Government, it’s clear that it is not ready to do what needs to be done for the economy as it is too neck deep in overspending, inability to block leakages and also its openness to engage. But instead, it is relying on its ability to honker down and ride public angst.
This thing is simple. Reduce government spending by over 50 percent, if possible, block leakages, move savings towards a temporary subsidy regiment to hold fuel prices and exchange rates for at least a six month period. This should allow for planning and the calming down of nerves.
Now, renegotiate debts to allow for longer tenured repayments to bring down debt servicing outflow that would also be used to stabilise the markets. Instil a true reform package at NNPCL. If you want to commercialise or privatise it, then do it. Sell it, raise funds and use the monies to buffer fuel prices and the exchange rate so stability can come back.
The confusion that is NNPC is the major problem here as decision taking will be quite cumbersome. One moment it is independent, the next moment, the Minister is handing down directives. The decision to hand over the Port Harcourt and Warri refineries to private interest is beautiful if it will happen as it will allow for efficiency in the value chain; that is if it is not sold to the usual suspects.
Importation should be democratised. Opened up. Which will now push competition that in time will impact prices. In real terms, at the current exchange rates impacting the landing price, Nigerians will not see fuel at Jonathan price levels in their lifetimes again and this is why government must temporarily move away from the free market economics of the International Monetary Fund into a buffer driven one funded by less spending on its part and a critical fight against corruption.
The issue is that the allure of the sector is too strong for the government and its cronies to hand off. Government will have to ask itself a very critical question: Do we still need a Nigeria or not? And if they still want Nigeria, then they should hands off.
What we need now is sincerity of purpose by the government and a robust sweep of management of NNPCL and a robust and effective socio-welfare impact to cover the vulnerable who are growing in malthusian proportions.
Edgar is the Duke of Shomolu.
