The Deputy Senate President, Alhaji Ibrahim Mantu, spoke the minds of many Nigerians when he reportedly stated at a forum organised by the Labour Ministry that: �The raw material for fuel is in Nigeria... But why can�t we put our refineries to work? I had thought that the revolution that we are all benefitting from in the communications and aviation sectors would affect our oil industry when it was deregulated. What has gone wrong with that policy that we can�t have private refineries?� The statement aptly captured the anguish and frustrations of Nigerians who, as citizens of the sixth largest producer of crude, have had to cope with the pains inflicted by soaring import-driven prices of refined petroleum products.
The basic questions on the lips of many fuel consumers are: Has fuel importation become a State policy? If not, why has it been difficult to fix, or privatise, the refineries? Who are the oil facilities repair contractors who took $70 million of tax payers� money without delivering? Why has the government refused to punish them? Are those contractors sacred cows fronting for top government officials? Who are the fuel importers? To demonstrate transparency, why has the government found it difficult to publish the list of these importers? How are oil import licences won? How competitive is the fuel importation process? With these and many questions remaining unanswered, many Nigerians have since dismissed the deregulation of the down stream oil sector as a reform measure gone awry.
But instead of accepting that it has bungled this deregulation exercise by its preference for a more expensive regime of fuel importation, the government insists that the incessant hikes in prices of petroleum products are the necessary pains to be endured for the reform to be successful. It is, however, clear to many except government officials that the government is walking the wrong path.
The monumental waste of public funds on fraudulent refinery repairs and the disincentives for private investments in refining has fueled the suspicion that the syndicate that sabotaged local refineries to pave way for expensive fuel imports during the notorious Gen. Sani Abacha regime, still holds sway in the oil industry.
The National Assembly has not reviewed the NNPC Act to remove its monopoly to procure petroleum products -- an omission that made the NNPC to license importers of fuel and jerk up their capital requirement for participation from $500 million to $5 billion. The National Assembly enacted the Petroleum Products Pricing Regulatory Agency (PPPRA) to solely fix prices in a so-called deregulated market. It allowed the Petroleum Equalization Fund (PEF) to continue to exist and collect N1 per litre of fuel in a deregulated market in which marketers are free to fix prices countrywide. Therefore, there is no point to search too far to know why 18 licensed refining investors have developed cold feet and the deregulation is not producing the desired results, as in telecommunications and aviation sectors. In effect, the refusal, for whatever reason, of the National Assembly to perform its law making and oversight functions credibly, is also responsible for this logjam.
Despite public uproar, the government has turned a blind eye to the rampant corruption and inefficiency in the NNPC, which contributes largely to prohibitive pricing. It is a national shame that a notable global producer of oil cannot refine it for its domestic market, while non-oil producing African countries, including Ghana and South Africa, have functional refineries. The administration complains of unemployment and massive outflow of forex hurting the economy, but it is reluctant to arrest that induced by fuel imports.
Nigerians will only support economic reform and bear the pains if focused and well implemented to yield the desired results. For now, sincerity is in short supply in the current oil sector deregulation.
