Replicating the gains of deregulation in petroleum sector (1)

BY ADEKUNLE OJO

IT is trite to say that the issue of the planned deregulation of the down stream oil sector has generated controversy and even pitched proponents and opponents of the intended policy against each other. And while one appreciates some of the fears of opponents of the policy, one equally discovers that most of the arguments put forward are off the mark.

But it must equally be admitted from the onset that the planned deregulation is not fool proof, most especially, if the extended windfall from the planned subsidy removal is not professionally managed.

But be that as it may, what this write-up intends to achieve is to lay bare the many gains recorded in other deregulated sectors and from there draw inference on the likely outcome of the deregulation of the petroleum industry sector which debate is raging.

If we cast our minds back to the not too- distant past, we readily remember the days of the almighty NITEL with its cartel like image. Those were very painful and agonising years when one had to spend a fortune to get connected to NITEL telephone lines. Because NITEL was a monopoly, its services left much to be desired. But thanks to the revolution in the

Petro Minister, Alison-Madueke

telecommunication sector which opened the space for GSM firms to come on board.

Ten years after that revolution policy, telephony has become an easy past time. The “telephone is not for the poor” slogan has been replaced by “telephone is for all” tune. There are no fewer than 90 million telephone lines in the country today.

And come to think of it, initially when the revolution in the telecommunication sector began about 10 years ago, not many gave it the slightest chance of survival. The truth is that at the initial stage of the introduction of mobile telephony, a new GSM line cost about N30,000 or more.

But with more than 10 major players in the sector, a GSM line today costs about N100. NITEL’s monopoly has been broken and telephone services are now not only cheap but more reliable.

Even beyond offering cheaper and reliable services, the telecommunication sector has become a major employer of labour. Apart from the employed professionals, thousands of youths who hitherto were jobless, now operate recharge card and phone booth businesses.

Many others are employed as drivers, catering hands and other ancillary staff. They are now gainfully employed thereby taking the burden of dependence off parents or relations.

Also, other benefits accrue to government, firms and communities as the telecom firms pay huge taxes to governments while communities where masts are sited are adequately compensated.

The resultant effects of the deregulation of the telecommunication sector are improved and cheaper services, better living standards for the citizenry, enhanced government revenue and a more diversified economy.

Another sector with testimonial impact is aviation. Today that sector has launched itself into global reckoning as it has been opened up to more investors.

Before now, the Nigeria Airways monopolised the nation’s air space, but due to inefficiency, graft and insider intrigues, some of the vices the petroleum industry is being accused of today, the airline went into extinction. The airline’s ordeal and chequered history are sad reminders of the ills of monopoly.

Apparently learning from the Nigeria Airway’s pitfalls, the Federal Government decided to liberalise the aviation sector by allowing more private investors to come on board. Today, Arik Air, Aero Contractors and other privately owned airlines compete for passengers in what has become a healthy but keen competition.

Air services have improved and mouth- watering incentives are doled out to attract customers. All these also translate into increased revenue for government as the airlines pay operational charges and other taxes.

Still, the airlines have gone extra miles to compete internationally as Arik for instance, now flies to London and other African countries. This competition ensures that global safety standards are met. Like the telecommunication sector, with more players in the aviation sector, many new jobs are created to service the sector just as better living standards are attained through gainful employment.

Even the same deregulation success story can be rehearsed of the manufacturing sector, particularly, cement production. Before now, cement production and distribution business was the exclusive preserve of a few monopolists mainly government owned, which never met the country’s cement needs.

Importation of cement which many liken to importation of sand continued unabated during that era. We easily remember the Cement Armada of the 80s when cement prices hit the skies. All that is now history.

Today, major cement companies like Dangote, Ibeto, Lafarge, among others, are operating and have brought down the prices of this important building material. Another boost to the sector is the readiness of major cement producers in the country to export the product to neighbouring African countries.

*Adekunle, an engineer, contributed this piece from Ibadan