HERE we go again. President Muhammadu Buhari’s, PMB, government like so many others before it has done what others have done.  Remove fuel subsidy. Usually as this event happens, there is protestation. The country is divided on the social media and on the other news media. Subsidy must go, subsidy must be retained. The debate typical of many things about Nigeria is facetious. We chase shadows.

We look for easy answers to difficult and complex problems. For the life of me, I have no recollection of the last time I bought petrol at official price. So, I did not like most Nigerians receive any subsidy benefit. You might want to ask, why remove what is not actually there? The reality is that in the books of government some subsidy are being paid and some persons are getting paid for supplying products at subsidised prices.

For the majority of last year and this year, NNPC was the sole importer of products and NNPC could not deliver. Now government has announced removal of subsidy. Kachikwu has followed up with assurance that within six months prices will come down?  I say not so fast, Mr. Minister of Petroleum Resources. This is Nigeria, a country that often defies economic theories.

What are the really issues? In my view Nigeria is a bad example of a deregulated economy. That is also not to say that deregulation is a bad economic policy to pursue, it is simply that we are often in awe of form and not substance. Even in advanced capitalist economy, debate about actual application of deregulation has continued.  The reason is because deregulation in a free market economy is a tricky business.

Handle it badly and it does not lead to real competition nor does it deliver lower prices or great quality. This is because deregulation can easily be distorted in the market place. Think Nigerian banking system, think aviation, think telecommunication, think electricity, and think postal service. In all these instances only one or two has delivered to some degree, in that case you might look at the telecommunication sector. Even then affordability and pricing is still an issue not to talk about quality of technology deployed and other service related issues.

What is my point? A deregulated market demands two very critical pillars. Robust laws not riddled with loops and a deregulated sector policed by strong regulators. Nigeria has failed on the two counts, which is why deregulation here has often failed or led to oligopolistic market. Price setting and regulatory capture have been the order of the day.

Look at diesel. For years, this product had a stable price across Nigeria at N130, contrary to what you might expect in a free competitive market. No variation in prices and with two or three importers with one importer being the market maker. If you take a narrow definition of this market characteristic, you might consider the diesel market a monopolistic market. This is the character of a deregulated market with weak regulator.

And so concerning petrol price deregulation, the risk is the same. We are going to find that oligopolies are going to take over the market. Prices will not be competitive, it will be fixed and it will be dominated by a single market maker. By asking fuel importers to seek forex at the secondary market, which is the black market, you will find that few of the importers have the capacity to do this.

What do you think will happen if for instance, a Dangote decides to go into fuel importation? He has the capacity to import massively, he has access to huge forex reserve and political connection to get forex at official prices—arbitrage notwithstanding. He lowers his prices—not necessarily to deliver market benefit, but to drive the competition out of business and then begins to dictate prices at a future date with our regulators looking hapless, defeating the whole point about deregulation. So what is the way out?

Realistically, there is little that can change as am sure this market is going to be dominated by very few importers fixing prices amongst themselves to the detriment of Nigerians. The hope to be entertained is for Nigerians, labour organisaiton, NGOs to organise around making sure that the regulator in this case the PPPRA is made to do its work. There is the need to re-examine the laws setting up PPPRA. Does it really protect public interest?

Secondly, the reason why a change in fuel prices creates such price shock is simply because there are no alternative infrastructures. It is bewildering that in a world moving away from reliance on fossil fuel economy, we are trapped in it.

Elsewhere in the world, for example Europe with its efficient intermodal transportation system, no one will take serious note of change in fuel price because there is efficient transportation system that does not depend on fossil fuel. The trains, the trams, the mass transit buses most of which run on electric modules etc.

In contrast, the government of Nigeria over time has failed to create this system that weans mass movement and transportation from fossil fuel. Nigeria is perhaps the only country this size that does not have an efficient railway system. Nor is our public power system any good. There is no stable electricity and to that extent a change in fuel prices has such a huge spiral effect, because of generator economy.

These are the issues the labour movement and Nigerians must sit down with government and discuss and have a plan. To say revert to subsidy system will not work, it is inefficient and it is corruption ridden. The real point at issue is what to do with the savings. The heavy infrastructure investment this country needs to end this problem once and for all is the way out of this bind. Anything else is akin to one step forward, two steps backward.

At the political level, PMB and APC are in a moral dilemma obviously. For years, they have been champions of subsidy retention and all such rhetoric. The moral is not the bind, they find themselves in. It is also that Nigerians must be more demanding and rigorous in appraising a politician’s statement.

Talk is cheap, but explaining how that talk can be made to walk is the real issue. Power shift, rotation, tribalism and all facial construct pales when confronted with the real challenge of economic management.

Mr. Paul Odili, a public affairs commentator, wrote from Asaba, Delta State