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Oil: Mr.President’s new dance step

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Ifeanyi Izeze



In less than a month, President Goodluck Jonathan raised two issues -single tenure and withdrawal of fuel subsidy. And curiously, each was as controversial as the other and actually very far from the immediate and pressing problems that needed to be addressed if for nothing at least to show Nigerians that this government is here to work in their interest.


In a move probably indicative of an undeclared course of action, Jonathan Monday August 1, 2011 decried the continued regulation of the pump prices of petroleum products which, he said, had become a drain on the country’s resources. However, characteristically, he did not categorically take a stand on whether petroleum subsidy should/would be removed or not.

Speaking on behalf of the President at the opening of the 35th edition of the Society of Petroleum Engineers (SPE) Annual International Conference and Exhibition (NAICE) in Abuja, Minister of Petroleum Resources Diezani Alison-Madueke said "the subsidy regime has effectively limited the government’s developmental capacities owing to its continued exhaustion of the nation’s resource base.

"Significant national income has been expended so far on price regulation of refined products in the domestic market. This significant drain in the national resources has limited government’s ability to provide a sustainable basis for private sector downstream investment and development."

This was the first major reaction of the President to the raging controversy over government’s continued subsidy on fuel imports.

No matter what anybody may want to argue, whosoever is telling the President that the subsidy on fuel is the bane of our economic underperformance and underdevelopment must have seen that Jonathan is very gullible and can be easily cajoled.

Is it not amazing that this President who came without shoes has suddenly joined the clamour for the removal of subsidy on petroleum products as his priority project barely few days from his announcement of the controversial single term proposal?

Our politicians talk as if they are completely oblivious of the plight of ordinary Nigerians. Over 95 percent of our people provide for their education, security, electricity, health, water, and every other thing that makes life worth living.

Truth be told, it is not subsidy that is actually draining the economy, rather the prevailing endemic corruption in government and poor quality leadership at all levels of governance in this country.

It is true that fuel subsidy could be a waste or drain on government. But it is also true that as government runs now, whatever savings likely to be realised from the proposed removal will end up in the pockets of already over-fed, corrupt and wicked politicians. So which is preferable of the two evils? Of course, the over 96 percent of Nigerians directly impacted by the price regulation would prefer subsidy to continue rather than few thieves pocketing the gains of its withdrawal.

This is where the issues of good governance and Jonathan’s seriousness in the fight against corruption should have taken centre stage before the single term and/or subsidy withdrawal proposals.

As was aptly captured by a public affairs commentator, "The day we have a President that will sit down here (not interested in going to Washington to pose for pictures with Obama), decide to work (not on tenure elongation and needless constitutional amendments); award contracts on projects (that impact directly on the needs of the suffering masses); directly supervise those projects and demand results and refuse excuses for failures; then all these shameless cries about the over flogged ‘subsidy’ rant will stop."

How can Jonathan be talking of subsidy as draining government’s resources and yet his government paid out an average of N220million each to members of the National Assembly just for reporting for ‘work’ in Abuja?

How can we be talking of fuel subsidy as the drain of government resources and yet capital expenditure in last year’s budget was hardly implemented but the money was fully spent?

The Federal Government if serious with freeing resources for development projects should address the growing cases of its misdirected spending as magnified by disclosures that whereas the government has recorded a staggering 99 per cent in the disbursement of the recurrent vote for this year, performance in the area of capital expenditure is at a miserly 34 per cent by the end of the first half of 2011.

The government is spending money and we are not seeing where they are spending it and this is the truth as all indicators of good governance and a healthy economy seem to be heading south-south.

This year also, from January to June, over N250 billion has been withdrawn from the excess crude account with no definite project tied to such withdrawals. And the President wants us to believe that he is yet to do or propose anything tangible because the cost of subsidizing fuels is draining the resources which could have been channeled into other areas.

Making our refineries work is now made to look as if it’s an unachievable goal and yet other nations without crude have refineries that are always in top shape. What a shame to the crippled giant of Africa!

Surprisingly, the Petroleum Minister at the SPE conference was reported as haven said that "Nigeria’s domestic refining capacity was on the verge of hitting over one million barrels per day following the eventual implementation of the country’s national energy policy which was expected to reposition the oil and gas sector for sustainable development."

Is it true that we are at the verge of processing one million barrels of crude oil per day as the minister reportedly said? Except something happened last night, Nigeria is known to have three and half existing refining plants with combined installed capacity of 445, 000 barrels per stream day. And these plants despite all the political jives have not been able to run at a combined average of 50 percent installed capacity. So it’s curious that the minister should say we are almost processing 200 percent of the nation’s known capacity in the refining subsector.

The Minister was merely playing politics when she told the SPE conference that the President has approved for the NNPC to build three new refineries. The question is: which NNPC, this one that could not run its three and half refineries or another NNPC?

There seems to be a policy confusion in the entire business of running the nation’s downstream oil sector. The government has been gyrating from one extreme of complete hands- off to another extreme of NNPC’s full participation. This smacks of outright confusion.

And even if the NNPC is going to build three refineries, the truth is that it will take at least forty eight months (four years) to put and bring onstream a refining plant starting from front-end engineering design to actual construction. So between now and the next four years, what happens? This is where both the President and the Petroleum Minister should be concentrating their efforts.

Ifeanyi izeze , an Abuja-based consultant on strategy and communication, can be reached at (

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