November 14, 2009

Deregulation blues

TO be or not to be, that is no longer the question. It is no longer if, but when this “dreaded nightmare” will land on hapless Nigerians, making life just a little more miserable.  So, after all the vacillation; the undiplomatic double-speak; after all the postulation and grandstanding by senior government officials; the “plague” is now upon us.

The final nail was screwed in last week when President Yar’Adua, in an uncharacteristic frankness told the British Minister of State for Africa Baroness Glenys Kinnock that “we are committed to deregulation because we are convinced that subsidy distorts the system, encourages corruption and creates more problems than it solves”.

And with that, deregulation of the down-stream sector of the petroleum sector has become a fact of life that Nigerians must begin to live with sooner than later.  Naturally, there have been a flurry of reactions from Nigerians home and abroad, high and low.

But what is this deregulation that has got Nigerians braying, wailing, praying and flailing ?  Simply put, it means that the Nigerian government will cease (or reduce to the bearest minimum) fixing the prices of petroleum products; especially kerosene and petrol (premium motor spirit).  Thus the prices of these commodities will be determined by the landing cost and other market indices.

So what is the problem?  The government.  And the government’s approach to the subject.  First, deregulation is in itself not such a bad idea.  In fact it could be the panacea to various lingering problems in the energy sector.

Deregulation of the down-stream sector of the petroleum sector is not unlike similar exercises in other sectors.  It worked wonderfully well in telecommunication and aviation sectors such that SIM  cards for mobile phones go as low as N150.00 from an initial high of several thousand Naira and a one way ticket for an hour’s flight could now be got for as low as N7,000 .

With importation of the products open to as many as qualified and are licensed for the exercise, and with proper anti-trust legislation to ensure that importers do not engage in price-fixing, the country should be awash with these essential products at quite competitive prices.  There is no doubt that prices will rise ab initio.  But at the end of the day, it is very likely that prices will, as it happened in the telecommunication and aviation sectors, crash even below the current prices.

So why are Nigerians not buying into the idea?  As I said earlier, one can only blame the government and government’s wrong approach.  If Nigerians have learnt anything from successive governments in Nigeria, it is that government is not to be trusted.

The credibility of governments in Nigeria must be lower than in China where a study has shown that prostitutes are rated higher than governments in the credibility scale.

With the probable exception of the short-lived Mohammed Murtala regime, our governments have shown a high capacity for infidelity.  And each one has been worse than the one before it.  Of course, Olusegun Obasanjo’s eight year misrule takes the cake.

So why should anybody believe it when the government says a particular gesture is for public good. Why should I believe anything the government says when 10million US dollars down the drain, all we have to show for such huge investment in power is uninterrupted power outage. We have so much faith in our governments promises and pledges that our first reaction its avowals is “make we hear word ‘bo”.

As if that is not bad enough, Yar’Adua’s government, like the one before it, has actually been de-marketing the deregulation idea. All we hear is ‘removal of subsidy’, ‘government can no longer subsidize NNPC’s inefficiency’, ‘government has only been subsidizing corruption’, subsidy this, subsidy that. It is as if some bodies in the government are fixated on subsidy.

There has been no concrete effort to properly sell the benefits of deregulation to the Nigerian populace.  There has been no serious effort to show Nigerians that ultimately, there are immense benefits to the Nigerian masses in the deregulation of the down-stream petroleum sector.

Nobody in government has told us that this initiative  will result in massive infrastructural development in the country when funds freed from subsidy (that word again) is ploughed into provision and maintenance  of roads, health-care facilities, education, etc.

Nobody is addressing the fears of Charles out of University of Nigeria Nsukka who, in a letter to the Editor of the Nation (Thursday November 5, 2009) slated’. “…Rather, the thrust of the entire deregulation policy is espoused  in the Nigerian context is to create a new carted of avaricious  greed on Nigerians while the importer will be accountable to the  likes of those in the FEC (Federal Executive Council ) and few other maximum Nigerians” or Tola Osunnuga in the same newspaper, same day”.

Opening up the growing and dominant petroleum sector, such as downs-stream petroleum is  important in dealing with the key economic engine of the country but the awkward approach the government in adopting is just a further confirmation of government prided with leadership failure” or Ike Ohia of FESTAC Town, Lagos. “The Federal Government is pursuing the deregulation of the oil sector in a very bad way.  People are not being carried along.

All the government is doing is simply trying to force down our throats the bitter pill…