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Deregulating the absence of governance

By Owei Lakemfa
PRESIDENTIAL spokesman, Olusegun Adeniyi is an intelligent person. That was why I was disappointed when he joined the chorus of government officials who argue quite illogically, that the scarcity of petroleum products which government attributes to hoarding and fraudulent activities by oil marketers, is a justification for the deregulation of the petroleum sector.

If as Adeniyi claims, there are  45 days   supply of petrol but that there is artificial scarcity because the private marketers “are hoarding the commodity and in the process selling for scandalous prices” then the logical response of government cannot be to hand over the entire process to these same unscrupulous and fraudulent marketers. Rather, these criminals should be arrested and jailed and  their fuel stations shutdown.

If government’s claims are true, what has it done to bring these crooks to book? Has it withdrawn any marketers licence?

If government with its legion of security services, including the Police, Armed Forces, State Security Services, Military Intelligence, Army Intelligence, Civil Defence, International Intelligence, Economic And Financial Crimes Commission, Criminal Investigation Department, etcetera, cannot bring these marketers to book, is it the ordinary Nigerian on the street that will do so when government hands off the process in the name of deregulation?

If government under the “regulation” system is impotent to regulate the conduct of the mafia in the oil sector  despite its numerous regulatory agencies, including the Department of Petroleum Resources, the NNPC and the Petroleum Products Pricing and Regulatory Agency (PPPRA) is it when the market is deregulated that it would develop the political will to regulate their conduct?

Everywhere I turn, I see government throw its  hands in the air claiming to be helpless to tackle basic challenges of governance such as sanitising a  system or even calling its employees to order.

The government’s Deregulation Implementation Committee headed by Finance Minister, Dr Mansur Muhtar with the three ministers in Petroleum  and Labour as members, accused the NNPC of “poor management, poor maintenance of refineries due to corruption, wastages caused by leakages and dependence on imported petroleum products”. So why is government incapable of correcting this and bringing the corrupt to justice?

The same committee accuses the PPPRA of lacking “capacity  to fairly represent interest of government and consumers, having been bedeviled by past incidences of corruption”. So which body can fairly represent consumers and government?

The government gleefully announces that ”the current pump price of N65 is constantly available in only a few major cities”.

If this were a serious administration, should it not have arrested and prosecuted those short changing Nigerians? Should a government that is incapable of protecting its citizens against fraudsters and crooks who are fleecing them, not hang its head in shame rather than celebrate its incompetence?

In the dark days of military rule, the Ibrahim Babangida regime  lamented that that a bottle of Coca cola was costlier than a litre of petrol and used that as justification for fuel price hike. That inglorious regime was to justify new fuel price increases on the excuse that fuel was being smuggled into neigbouring countries. That was two decades ago . It is shameful that the Yar’ Adua administration is today making the same trite excuse.

On deregulation itself, apart from the importation of fuel by the NNPC, all other  processes, including distribution and retailing are fully in the hands of the private sector and these are the causes of the long queues.

So in reality, deregulation should basically be about bringing in the private sector into fuel importation and refining which is an old policy. Ordinarily there would be nothing wrong in this, except that government’s mindset is  sharp increases in prices.

About nine years ago, the Obasanjo administration  licenced 18 private refineries. What the government should tell us is why these refineries were not built. Why after 55 years of oil production, we cannot add value; why  all successive governments  do like prodigals, is to sell the crude and share the money?

If government claims that deregulation will make products available and reduce prices, why hasn’t this happened in the case of diesel which has been deregulated for over two years? Rather than being available, diesel is scarce while prices are volatile depending not on so- called market forces but on the mood of the marketers.

Government says the burden of subsidy is too heavy to carry. But it is an open secret that the subsidy is not because Nigerians have suddenly become fuel guzzlers; the subsidy is essentially due to the importation of fuel products  rather than local refining. Statistics provided by the Government Implementation Committee shows that out of the N400 billion the administration claimed to have spent on subsidy in 2008, N113 billion was for demurrage.

Government claims that: “The majority of Nigerians don’t  enjoy the subsidy. Rather the real beneficiaries are some importers who inflate the prices and smugglers who  divert tonnes of products meant for the Nigerian market to neigbouring countries…”.

If this were true, then the challenge of governance is to tackle these challenges and not to use them as excuses to increase the burden of the Nigerian.

Deregulation will lead to hyper inflation, closure of many cottage industries and  further induce poverty. In a generator-dependent country where energy costs account for 33 per cent of production cost, deregulation will lead to factory closures and massive job losses.


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