Nigeria is a major crude oil producer. It currently produces about 1.3 million barrels of crude per day. In the best of times, it can pump somewhere around 1.8 million barrels of the black gold daily. That number could cross the 2 million mark if we decide to end crude oil theft and illegal bunkering. These will not happen because in Nigeria we do not decide to end evil because it benefits the high and the mighty!
That we produce so much oil the world badly needs is no guarantee that the lives of many Nigerian citizens are better. Thousands of our young ones are scavenging from the waste bins for a living. And it is not peculiarly a Nigerian problem. No Subsaharan African country dependent on an extractive economy is an advanced or advancing economy. They are deeply in debt, experiencing high level of social upheavals, steeped in economic poverty, unexplained inflation rates (can you imagine that Nigerians are living under an inflation rate the government agency responsible for this matter says is 33.8%!) and high population growth rate. This is a story for another day!
Given that Nigeria is a major crude oil producer (the highest in Africa), you would think that petroleum products would be easily affordable. They are not. To be fair, they were until over a decade ago. The first of those major products to take a flight was kerosene, the energy of the poor. The primary reason being that since we had destroyed all our four refineries, kerosene was too expensive to be imported and sold to the poor at a margin. So, most product marketers removed it from their imports list and the problem was solved, the Nigerian way! Next came diesel, the energy for the rich! Government decided it was no longer going to subsidize diesel for the rich…and the price of diesel went over the roof.
Welcome to 29 May 2023! Subsidy for petrol, the commonest of our energy goods, evaporated. From an average price of N255 per litre, prices went up to as high as N617 within a month of the current government of President Bola Ahmed Tinubu. To be sure, REFLECTIONS! is in support of fuel subsidy removal. The problem with the May 2023 subsidy removal was the devaluation of the Naira the following month by the government. Given that we relied solely on imported petroleum products at the time, the devaluation policy took prices of the products well above the reach of many homes.
Even when the price of petrol soared too high, the removed subsidy was reapplied surreptitiously even with vehement official denials until lately when the Nigerian National Petroleum Company Limited (NNPCL) had to admit that it was choking on a staggering $6 billion debt it owed product owners. In plain language: we have been subsidizing petrol prices at over N700 a litre. Currently petrol prices in Nigeria are above N1,000 per litre. On the average, you need the newly approved minimum wage of N70,000 a month to fill your car tank!
You could not have been prouder to learn that a Nigerian was going to permanently solve one major national problem; and unintentionally several others. For over four decades, the story of petroleum products marketing in Nigeria has been characterized by all that is bad: scarcity, smuggling, adulteration, opaque subsidy regime, frequent price increases; name it. When, fifteen years ago, the government of late President Umaru Musa Yar’Adua, for whatever reasons, had to revoke the sale of Port Harcourt 1 and 2 refineries to billionaire businessman Aliko Dangote and his friend, Femi Otedola, by the Olusegun Obasanjo government, many watchers were taken aback.
To be sure, the refineries built in the 1980s at Alesa Eleme, near Port Harcourt, had been comatose for decades. Years of neglect, as is typical of all government commercial entities, made the refineries to start refining trouble. The Obasanjo government took one critical look at the sprawling complex and decided to relief government of a burden that was the company. With the benefit of hindsight, it was a very wise decision to sell it. In fact it would have been better for the government to have paid anyone hundreds of millions of dollars to take over the refineries.
Fifteen years later, the government has expended several billions of dollars on the company with a view to getting it to do what it was meant to do with zero success. Anytime a deadline given for the operation of the company draws near, the company decides to develop a recalcitrant mind of its own. Timipre Silva, the immediate past minister of state for petroleum will never forgive those stubborn refineries for causing him a governorship election defeat. Timipre had literally staked his candidacy on the refineries refining crude but they refused to corporate with him. He first set a December 2022 deadline and forgot to consult with the refineries. He kept postponing the deadline until he lost his come back to government house in Yenegoa.
And so it was a great relief that some two years after the revocation of the sale, Dangote let it be known that he was going ahead to build his own refinery at Ibeju Lekki in Lagos. The initial commencement of production was scheduled for 2017; and there after it became a yearly target. Even after it was eventually commissioned by the immediate past President Mohammadu Buhari in May 2023, the refinery refused to produce.
Thankfully, it eventually did this year, starting first with the oils of the rich: diesel and jet A1. You would think that the Dangote Refinery coming on stream would bring down the prices of petroleum products. Alas, it has become an albatross for Nigerians. The billionaire owner of the refinery has browbeaten just about everyone to total submission. He has engaged in his fiercest fight ever as an investor. Apart from his ubiquitous business empire and products all over the country: cement, salt, sugar, pasta, flour, name it, the Kano born taciturn Aliko Dangote is also known for fighting individual competitors: Ibeto (thoroughly defeated and driven out of business), Otedola (smart enough to turn around to make his enemy one of his best friends today; and survives); Abdulsamad of the BUA Group (certainly not a pushover).
Some two or three years ago, I told a few people that the Nigerian government would never fully remove subsidy from petrol and completely deregulate the downstream sector of the petroleum industry until the Dangote Refinery came on stream. And that when that happened, the billionaire businessman would take the price of his products to high heaven! It has happened just as I predicted. In a way, though the Dangote Refinery is a private business entity and meant to operate as such, it would be wrong to view the company entirely from that prism. For starters, given his deep connections with every government since he emerged as a major investment czar on the Nigerian horizon, Dangote exploited the connections to his advantage. The now embattled former central bank governor, Godwin Emefiele, ensured that Nigeria’s hard earned dollars flowed cheaply into the private refinery in the hope that when it starts to produce, foreign exchange expended on importation of oil would end and our local currency would begin to firm.
That dream hasn’t happened; in fact it is safe to say that the country is losing more. Here are some facts: Dangote has blackmailed and even threatened (with court action) just about anyone who attempts to import petroleum products. Even the behemoth NNPCL has succumbed. He has gotten the government to supply his refinery with crude oil (did I hear 400,000 barrels per day) only for him to pay in Naira. That means the government is denied the opportunity to earn foreign exchange to the extent of the volume of crude supplied him. Except my street economics sense is failing me, that also implies that the Naira will continue to struggle for breath. Thirdly, despite him getting crude in Naira, the prices of his products are said to be higher than the costs of imported products. He has cajoled both the major and independent product marketers to drop the idea of importing cheap fuel.
Just so we know, monopoly, which to all intents and purposes is the business philosophy that Dangote Industries likes to thrive in, is the enemy of capitalism. In a regime of healthy competition, the customer is king. But Dangote does not want to hear that. One would have thought that when others threatened to import, he would respond with a price reduction. Handing over the production and sale of petroleum products to one person in a nation of over two hundred million people is bad business for Nigerians, a grave threat to national security.
Nigerians beware!
Shame on Anti-EFCC governors!
Just as REFLECTIONS! was being put to bed, news filtered in that the Supreme Court had ruled against the 16 governors who approached the apex court to rule that the Economic and Financial Crimes Commission (EFCC) was an illegal entity. The governors based their selfish argument on the premise that the National Assembly ought to have subjected the law establishing the anti corruption agency to the approval of the state houses of assembly, their puppet bodies.
The last edition of REFLECTIONS! published on 1 November 2024 titled “Governors War against (EFCC) Anticorruption!” was vehemently opposed to the position of the governors to have even contemplated going to court on the issue in the first place. They stood against the current, the interests of the state, and the people of Nigeria. It is comical that they lost woefully.
Now that the governors have lost, they should not only cover their faces in shame but also prepare to account for their actions when they leave office. With this ill advised case effectively behind us, EFCC stands on higher moral and legal grounds to vigorously prosecute cases against former governors. The fight against immunity for our governors should commence in earnest.
Good riddance to bad rubbish!
Esiere is a former journalist!
