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Why deregulation, Prof Amdii

EVEN as the Federal Government and organised labour last week set up a committee to work out the modalities for the implementation of the planned full deregulation of the downstream sector of the Petroleum industry, a professor of Policy Analysis and Development Studies, Sam Amdii, has declared that government can hardly deregulate a market it has little muscle to control or check.

Prof. Amdii

Delivering a paper a on “The implication of Deregulating the oil industry for Nigerian Stakeholders”, at workshop organised by the Lagos Zonal Council of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), in Ibadan, Oyo state, Prof Amdii, who teaches at the University of Abuja, posited that posited that to deregulate in an economy such as Nigeria, there must serious factor endowment to cater for shocks which come as a consequence of liberalization.

According to him “the emergence of inappropriate pricing haphazardly undertaken by marketers in the local market has created tensions. The generation of victims circle of price hikes and strikes have produced band wagon effects on the purchase of fuel and hoarding of products leading to protests and strikes. The critical role being played by Petroleum Products Pricing and Regulatory Agency (PPPRA) with respect to appropriate pricing has not been able to limit potential abuse although competition has been possible.

Corruption has been built into the nexus of appropriate pricing in a primitive capitalist state like Nigeria where collusion exists between the marketers and those inspectors who check the selling pump price. This is dehumanizing for an average Nigerian consumer.

The reform provides for appropriate cushioning measures for the reform in terms of prices, availability and poverty outcomes because of changes. Unfortunately   however, government’s short medium and long term   measures have collapsed   before   they took off. It is a common knowledge to find long queues, sporadic price changes and the emergence of black market. These are evidence of the fact that government can hardly deregulate in an economy that government has little muscle to control or check. Even the measures taken have been stultified by government apparatus.”

“One of the cardinal goals of the reform in the oil industry is to refurbish older refineries and encourage the building    of new refineries through private capital as a means of sustainability. If such has been embarked up efficiently, supply chain could, have been overhauled, bottlenecks removed and insufficiencies promoted by state monopoly weakened. However, government has not been able to refurbish the refineries in Port Harcourt or Kaduna.

Similarly, little or nothing has been done to attract international consortiums to establish refineries. Even cooperation between indigenous business moguls with their external counterparts has not taken place.

This demonstrates a mockery fort deregulation. Deregulation based on importation of a large component of local consumption cannot sustain incentives to attract investments in refining and facilitating the entry of other players into the supply chain. This has hampered investment capacity by local and foreign capital.”

Deregulation, World Bank, IMF agenda
Continuing, the University don, argued that deregulation as it was been currently implemented and given its monopolist structure of supply, led to monopoly profits and increasing centralization of power in the federal government which directly had adverse effects on the nation’s capital.

He said: “It further makes the whole country vulnerable through unbridled influence of world capitalist management institutions, the World Bank and International Monetary Fund.

These effects are exactly what the present experiment in democracy should try to avoid. Democracy means popular governance, yet we are seeing vested international interests pushing our institutions towards increased concentration of power and a consequent abuse of the electorate from which all powers flow. The reverse relationship between workers and Government can be attributed to labour unrest which has resulted to a fall in the oil and gas industry activities. Consequently it has affected the revenue that would have accrued to government coffer. It has been observed that labour demand is influenced by money wage rate. Deregulation also affects all Nigerians not only the wealthy but also the poor, and the CIA World Facts Book estimates that as at 2006, 60% of Nigerians live on less than a dollar a day.

This is a huge number considering that the World Bank and the Nigeria population Commission respectively estimates that Nigeria has a population of 150 million as at 2006. According Khan (2005), deregulation of downstream sector has deeper and more immediate domestic political implications for the country than those that may occur in the upstream sector. He asserted that the deregulation policy has caused series of disruptions within the political system because Nigerian believes that low petroleum prices are a given right and have protested vigorously through strikes each time the price was increased in the last few years and are bitterly against the deregulation of the downstream sector.”

“As noted by khan above, these disruptions have widespread political implications in particular; there is a constant fear of inevitability instability in the system such that would manifest the continuous existence of system in capacity. Given the inevitability of the government’s reform policy in the oil industry, the fact still remains that the government is prepared in terms of space and time.

Having perused the major tenets and conditions for the reform, it is quite opaque that the government has been unable to provide the infrastructure in terms of soft and hard wares that could functionalize the reform policies. The current complexities and the endemic situation shows that now characterize the oil sector should large be tied to these incapacities by the government, the external influence and the ingenious business moguls in Nigeria.”


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