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Let us deregulate now!

By Ochereome Nnanna
TO deregulate the oil sector or not to deregulate it is an issue. When to do so is even more of an issue. The logic of deregulation is beginning to catch on, even among sections of organised Labour. The success of the liberalised telecoms sector is a very persuasive example to cite.

However, telecoms has never been as greasy, contradictory and cult-prone as the oil sector. The evils that come out of oil are as many as the good that it serves, but telecom is a straight business that does not seem to leave pain in its trail for anyone to suffer.

To a lay person like me, deregulation means allowing market forces to determine the prices of petroleum products and giving the business completely over to the private sector. Those who attack the impending deregulation of the petroleum downstream in Nigeria have very sound, valid and emotionally appealing argument.

According to them, throwing the oil products market open at a time the country’s refining capacity is almost zero is like throwing the ordinary Nigerian citizen to the wolves.

Petrol, diesel and kerosene constitute the ordinary Nigerian’s last men in defence. Because we do not have access to public power supply, we buy petrol to power our noisy little boxes called generators.

Without petrol and diesel, most economic and domestic activities will grind to a halt in Nigeria.

There are no functional railway services and water transportation exists at the primitive level. All that we have to move on are roads, and the largest and worst maintained road network belongs to the federal tier of government.

Nigerians daily hit the roads hustling to eke a living. Deregulating the fuel products at this time will amount to crippling economic activities and subjecting the citizenry to untold hardship. Prices will not only hit the roof but the products might become scarce, especially in far-flung parts of Nigeria.

Matters have not been helped by the Federal Government’s sudden admission a week ago that its promise of upping the national electricity capacity to 6,000 megawatts by the end of this year will no longer be met.

Assuming that deregulation is introduced at the same time when power supply will climb from the current 2,000 to  6,000 megawatts, there will be a welcome cushion to blunt the bite that will descend as a result of its attendant prices increases.

It is based on these and other ideological aspects of the argument that Labour and some civil society groups have staunchly opposed deregulation.

However, based on  experiences about the rapidly deteriorating capacity of the Federal Government to provide services of any sort to the citizenry, I am persuaded to sue for the end of government involvement in the fuel business, except as a regulator.

It makes no sense insisting that a government that has demonstrated its inability to repair and operate the refineries must continue to spend our money in that direction.

Government has also confessed its powerlessness to deal with the so-called cabal that freeloads on the over N600 billion it spends every year to subsidise fuel imports. Government has admitted its own failure. What is the need of insisting it must keep trying?

Must we apply the Gabriel Igbinedion dictum of when pikin fail for class e go repeat (when a child fails in his class he will repeat; his answer to charges that his son, Lucky, former Governor of Edo State, was a failure and should not go for a second term).

Let us close our eyes and remove government’s involvement in fuel supply once and for all. In any case, Nigerians in the East and far North have never really benefited from government subsidy of petroleum products. They had been deregulated in those areas long ago. Deregulation won’t be news to them. They will only welcome the rest of Nigeria to the club.

Let us go through the necessary short term hardship that will follow it. With time the forces of demand and supply will strike equilibrium. When the pricing and regulatory environments become attractive enough, investors will rush to establish refineries in Nigeria, just as we have seen in the telecoms sector. Nigeria is an investor’s gem as a result of our large population which is hungry for the provision of modern necessities of life.

Labour should stop opposing deregulation per se. Rather, they should argue for adequate soft landing, such as guaranteed supply and prevention of undue exploitation by the marketers. Labour can even form cooperatives and become an importer en route to becoming a refiner of petroleum products just like other interested investors. If government could help make Labour a major force in the transport business it can be persuaded as part of the cushioning process to assist it to become an importer and later refiner.

How should we spend the N600 billion? The answer is simple. Return to the General Sani Abacha formula- the Petroleum Trust Fund (PTF) deal. Within the three years the PTF existed, General Muhammadu Buhari, its Executive Chairman, was able to effectively intervene in critical sectors of the economy, especially infrastructure.

All we need to do is to channel the N600 billion into three critical areas: education, infrastructure (roads and railways) and power.

We must not use it to increase the salaries of civil servants who add little or no value to the economy. Let us take away the money from the cabals and channel it to areas where it will have multiplier effects.

Failing to deregulate now amounts to postponing the evil day and greasing the vicious circle. Once we enter February 2010, deregulation should come into full effect.

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