I WATCHED, the town hall meeting organised by the Newspaper Proprietors Association of Nigeria to debate the planned removal of fuel subsidy, on television. Ngozi Okonjo- Iweala, Minister for Finance, presented government’s position on the need to remove the subsidy. Her scholarly and studious visage conveyed the aura of expertise and credibility.

I was impressed by the stern and no-nonsense style of this very accomplished lady attired in her unmistakably Nigerian outfit adorned by a scarf that perched on her head, less like a scarf, but more like a diadem. A diadem, not of royalty or aristocracy, that is, not bequeathed by the accident of birth, but of accomplishment, that is, conferred by hard work and personal achievements.

Her presentation was lucid and crisp. I was actually beginning to be convinced by her proficient and articulate enunciation of the Goodluck Jonathan administration’s position on fuel subsidy and the seemingly irrefutable logic of her argument. Then, suddenly, Nigerian Electric Power Authority (NEPA), or as it is presently called, Power Holding Company of Nigeria (PCHN), struck; the light went off and my TV with it.

Immediately, I snapped out of my credulity. I realised that although the presenter is a renowned Harvard educated economist and her presentation is of World Bank and White House standards, this is still Nigeria – an anomalous country where nothing works and universal theories and conventions do not hold.

After all, the Nigerian reality is that of an oil-rich country with the social indexes of the poorest countries of the world. It is that of a democracy where elected public officials abdicate their responsibilities to the electorate and collude to loot the public treasury and economically squelch the life out of the masses. It is that of an unconscionable system that promotes the inordinate wealth of an elite few and relegates the generality of the people to desperate poverty and endless drudgery for daily existence.

If not for the Nigerian aberration, why should I, in 21st Century urban Nigeria, need a generator to power a TV set? After so many years of planning and work and the enormous resources (including countless billions of dollars), supposedly committed to the power sector to ensure a steady supply of power, why is there still no constant supply of electricity in Nigeria? What of the earlier rosy promises, backed by coherent and eloquent analysis and clarifications, as to how the power sector will be transformed and energy supply boosted?

That interruption of electricity brought to the fore my deeply embedded distrust of the Nigerian government. And casting a critical eye on the same presentation I thought was convincing, I realised it was actually a hoax, a glamorous hoax. .

The Finance Minister made a persuasive case supported by figures and charts on the need to remove fuel subsidy. She said that the landing cost of imported fuel is 123 naira per litre plus a distribution cost of 15.72 naira. So, that the government subsidy per litre is 138.72 naira (123 + 15.72) minus 65 naira, that is 73 naira. For the year, 2011, this subsidy is costing the government a total of 1.4 trillion naira, a whopping 30percent of total federal government expenditure. Subsidy, she stated, distorts the market and discourages private investment in the construction and maintenance of refineries in Nigeria. In addition, it encourages the smuggling of petrol from Nigeria to neighbouring West African countries where prices are higher.

On the other hand, the removal of fuel subsidy will free money that will be directed specifically to road construction, urban mass transit, light rails, manpower development and other programmes tailored to mostly benefit the poor. Secondly, it will make investing in the downstream oil sector profitable, and thus, attract private investments in the development of local refineries. With many private refineries refining and marketing petrol, the market will be competitive and the price of petrol will invariably decrease over time. She gave examples of the telecommunication and the airline industries, where the removal of government monopoly brought efficiency and reduced cost to the consumers.

Disingenuously, she did not tell Nigerians the cost of refining crude oil in the four existing Nigerian refineries. One litre of refined fuel imported into Nigeria cost 138.72 (including the cost of distribution)and as such costs the Nigerian government 73.00 naira in subsidy, but how much does it cost to refine one litre of petrol in our local refineries?

According to Prof. Bala, an economist and an expert in drilling engineering, Dr. Izielen Agbon, former Head of Department of Petroleum Engineering at the University of Ibadan and other experts of petroleum economics, the average cost of producing one litre of petrol in the Nigerian refineries is about thirty four (34.00) naira per litre. So, with the cost of production at 34.00 naira and the sales price at sixty five (65.00) naira, how could there have been a subsidy?

For domestic consumption, the country needs 445,000 barrels of oil per day, and the government earmarks this quantity of oil (not for export) per day for internal consumption. According to government figures, the local refineries produce 38.2 percent of the domestic petrol consumption. This leaves a shortfall of 61.8 percent in the daily fuel consumption need. The 61.8percent of the reserved volume for internal consumption, 275, 000 barrels, per day are sent outside the country to be refined and the refined products from them are imported into the country. For this foreign refined oil, the Nigerian government pays for only shipping and refining. And the cost of these to the government is about thirty five (35.00) naira per litre.

In other words, whether the fuel for our national domestic consumption is refined overseas or in Nigeria, the cost of production is significantly lower than 65 naira, which is the price at the pump. So, what has the Nigerian government been subsidising? As Prof. Tam David-West, the former Minister of Petroleum has rightly stated; there is no fuel subsidy in Nigeria.

By telling Nigerians that the landing cost of imported petrol is 123 naira, the government is pretending that Nigeria purchased the crude oil for domestic consumption in the oil market. The fact however, is that the crude oil is produced in Nigeria and sent to designated refineries outside Nigeria to be refined and sent back to Nigeria. The cost of this refined fuel to the government is limited to only the costs of refining and shipping.

It is fraudulent to insist on the removal of a subsidy that never existed.

BY TOCHUKWU EZUKANMA a commemtator on national issues, wrote from Lagos.