Matters Arising From The Fuel Crisis – Emma Agu

Ibe kachikwu

Ibe Kachikwu, Nigeria’s minister of petroleum, state, continues to remain in the eye of the storm as government tackles the fuel crisis.  Although the agonizingly long queues, chaotic scenes, violent outbursts and endless frustration at filling stations are beginning to abate, it will be erroneous to conclude that we are out of troubled waters.

If anything, forthright as ever, the minister has unequivocally stated that measures put in place to tackle the current crisis are indeed just short term solutions. I call them palliatives.

In the nature of things, there are those who choose to remind us that fuel queues are still with us, that Kachikwu is yet to deliver on his promise to eradicate the queues on a particular day. That is, ignoring the fact that what he actually said was that the queues would begin to abate on a particular day. Nonetheless, if the queues are yet to abate, in spite of the demonstrable effort of the minister, it behoves us all, especially the media, to identify the cogs in the wheel of progress. But what I see is the persistent effort to paint the dark side of things, to always see the glass as half empty and not have full!

Part of the problem is that, we often dwell on the effect of poor policy or lack of it and ignore the root causes of our problems. By the same token, responsibilities that ought to be shared by the various arms of government are shoved to only the executive branch with other arms of government posturing as if they can extricate themselves from responsibility. We shall return to this shortly.

One salutary effect of adversity is that it throws up opportunities that, explored, can lead to very beneficial outcomes. I think we stand a good chance of altering the balance in our favour if matters arising from the fuel scarcity are subjected to objective scrutiny.

The first matter arising is that there exists, at all times, those whose stock-in-trade is to sabotage every government policy for personal benefits. They did it to Olusegun Obasanjo, they did it to Goodluck Jonathan; they are now doing it to Muhammadu Buhari. These unscrupulous petroleum marketers continue to sabotage the effort of the department of petroleum resources, DPR, to stabilize the fuel supply situation. To them, it does not matter if Kachikwu, like other ministers before him, decides to shout himself hoarse, adopt the most novel strategies or even preach to them from the pulpit. Ask any motorist in Lagos and you will be told how some petroleum marketers divert truck loads of premium motor spirit, PMS, or petrol from the city centre to the outskirts after escorts from the DPR would have left the gas stations. These unscrupulous dealers deploy every strategy to beat NNPC surveillance.

Out of the prying eyes of the DPR, the diverted fuel is sold at much higher prices and the rest recycled to the city centre to be sold in the open ‘black market’ at cut throat prices. Certainly the fuel being hawked by vendors, Nigeria’s army of jobless youth, did not rain down from heaven. Somebody gave it to them. And it is not Ibe Kachikwu, who has been doing a yeoman’s job, trying to clean up the Augean stable created in the decades when the locust ravaged our common patrimony with reckless disdain and unconscionable rapacity.

Now, we must return to the realistic choices that need to be made, no matter how unpopular they may seem in the short run. Here is the scenario. Over time, when PMS is scarce, vehicle owners are ready to pay any price to obtain it. Not only that, for far too long, PMS has never really sold at a uniform price all over the country. Thus there have always been spatial and temporal disparities in the price structure. Paradoxically, for largely political reasons, government has always retained a uniform pump head price of PMS that defies practical logic or economic sense, rates that are unattractive to suppliers either from local refiners or importers. This explains the crippling subsidy that has been exploited by the oil cabal to the detriment of Nigerians. Either way, the people suffer double jeopardy: prices go up even as scarcity persists.

To understand the situation, we need to listen to former treasurer of the western zone of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr. Shina Amoo. Quoting Amoo in its story, Scarcity: Queues grow longer despite Kachikwu’s promise, the Saturday Punch of April 9, 2016, reported thus: “The former IPMAN chief said oil marketers could not buy above the recommended price and sell below the price…” Punch quoted Amoo further: “The April date given by the minister (Ibe Kachikwu) is not feasible. The man first said the scarcity would end by May and he came under heavy attacks so he apologized and gave another date. I don’t think the scarcity will end earlier than end of May.

“The last time I bought fuel, I paid N182 per litre and how much do you expect me to sell that”, he queried, adding: “It has to be higher and that is why filling stations now sell as high as N200 a litre”.

Some home truth, you will say. So where do we go from here? Blaming Ibe Kachikwu or any other person for that matter is begging the question. We cannot eat our cake and have it too. Something has to give. We either restore subsidy, with all its adverse effects on public finance or we allow market forces to stabilize the system. Ask any cab operator or any vehicle owner and the response will be that they don’t mind paying more for fuel so long as supply of the product is guaranteed. I think that should be the strategic index in tackling the fuel crisis. If that is what the price modulation principle is all about, let’s muster the political will to get cracking!

But the most important matter arising from the fuel crisis is the need to enact a policy framework deregulating the downstream sector in such a way that gives investors the confidence to prefer Nigeria to other investment destinations. Until we create an environment that allows local refineries to provide the bulk of the country’s PMS requirements, we will continue to experience periodic disruptive fuel shortages.

We are back to the issue of shared responsibilities. What is the role of the legislature in all these? Why is the Petroleum Industry Bill, PIB, still circulating in the National Assembly? What prospect does it hold for a more robust and efficient oil industry? Why are those interested in killing the bill gaining the upper hand? Can the Eighth Legislature depart from the past and place itself as an icon of patriotism by passing the PIB without further delay?

Rather than the thinly veiled campaign to discredit Kachikwu, as in the distraction of using a private jet on which NNPC did not expend a kobo, we should preoccupy ourselves with addressing the fundamental structural challenges that have discouraged investors in the downstream sector of the industry and which, unattended to, will continue to retard not just the development of the industry but the overall economic well being of the country.

Agu, a fellow of the Nigerian Guild of Editors (NGE) and the Nigerian Union of Journalists (NUJ) is publisher of Zest Traveller magazine & CEO of Gavinta & Associates Ltd.

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