A Week Of Frustration And Re-strategizing By Nasiru Suwaid
This week, indeed even in the past few weeks, many a Nigerian citizen, have silently wondered and even openly queried, why there is a debilitating scarcity of Petroleum Motor Spirit (PMS) in the land, despite the fact, President Muhammadu Buhari (PMB), who is the Nigerian head of state and he is also the country’s substantive minister of petroleum resources, while Dr. Ibe Kachikwu, the minister of state for petroleum resource is an experienced oil industry player, even before his elevation to the political policy administration sphere.
Mind you, the Nigerian had president administered the sector, as far back as the tail end of 1970’s, when he served as petroleum minister, in fact, it was him who built most of the refineries, the country currently relies on for petroleum energy requirement, thus, highlighting the fact, deficiency in administrative governance, should not be factor and a hinder to the experienced duo.
In that case, why is there petroleum scarcity in the tenure and administration of those who promised to run the sector; efficiently, honestly and with requisite professionalism. The answer is very simple, it is because of the ongoing reform in the petroleum industry, to weed out corruption in the sector or if I am to be most specific, it is because the major means of importing refined petroleum, as our local refineries do not have the capacity to satisfy the demand, has been stopped because it is an avenue for the perpetuation of financial sleaze.
Principally, before the beginning of this year, it is through the operation of Oil Swap Agreements (OSA), crude oil is exchanged with refined products to meet local demand, but, it was discontinued, basically, because it is prone to abuse and indeed, it was abused at the expense of the Nigerian state.
In fact, the report of United Kingdom based Natural Resources Governance Institute (NRGI) of last week, which alleged that the Nigerian National Petroleum Corporation (NNPC), failed to remit $4.2 billion dollars into the federation account in the financial last year 2015, specifically targeted the operation of Joint Venture (JV) cash calls as well as revenue retained from domestic crude swap and Nigerian Petroleum Development Corporation (NPDC) sales, which is the mode of administration of the Oil Swap Agreements (OSA), as one of the reason for the financially inappropriate occurrence.
Now, before the present era, what used to be operated, as a means of importing refined petroleum products into the country, was the oil subsidy regime, which has deprived the Nigerian government nearly N2 trillion naira, without the products ever being available to the people and was verified by the last administration, as an unsustainable fraud that has been subject of prosecution.
Basically, it is the reason why the Nigerian National Petroleum Corporation (NNPC), became the sole importer of refined petroleum products into the country, not because of any ideological attachment to socialist command and control economics, rather, it is because the private sector operators and importers of refined products, have proven time without number, they have became adept to corruption and could not be trusted to diligently but more importantly, to honestly execute the Oil Swap Agreements (OSA).
Also, many operators in the private sector have advocated for the selling of national refineries, as panacea for the availability of refined products, but, even at optimum level of performance, the refineries would still not meet domestic demand and in an era of complete deregulation, where demand has outstripped supply and going by the price equilibrium laws of economic, what stops the price range of N200 naira, becoming the appropriate price of the product, to petroleum traders motivated by only greed. The simple truth is that the only solution is for Nigeria to refine its petroleum products locally, pending which a numbers of short term measures have to be invented, to cause the availability of the products for social and economic activities.
And this two other things:
ON 2016 IMF ARTICLE IV CONSULTATION REPORT
This week, the 2016 International Monetary Fund (IMF) article IV consultation report came out, with a number of projections, recommendations and wishful fallacies. First, the report projected a much lower Gross Domestic Product (GDP) for Nigeria, from the estimated 2.7% percentage point to a lower 2.3% percentage point, also, projected a much lower crude oil revenue for the economy, thus a further deterioration in government finances, despite the fact, other international institutions have predicted a resurgence and indeed, even the Organization of Petroleum Exporting Countries (OPEC) and other independent producers, have realized the folly of excess production on the financial health of oil industry, thus, have started an effort to check over production.
But, what is even more significant is attainment of forcing the United States of America (USA), into the importation of crude oil for domestic usage, after the financial ‘crippling’ of the Shale oil production as a viable industry. The report further projected a continued challenge with the provision of Foreign Exchange (FOREX) currencies but, it recommended and commended the sustained effort at diversification of the economy, as a viable means of tackling the forex issue, it hailed the Central Bank of Nigeria, for raising the Monetary Policy Rates (MPR) instruments, to check excess liquidity and preponderance of unproductive idle funds in the economy.
Now, here comes the fallacy in the report, they projected a resurgence of insecurity in Nigeria. When I saw this recommendation, the first thought that came to my mind, was whether the International Monetary Fund (IMF) team, have extended their consultation into the defence ministry, apart from the established contact with the Federal Ministry of Finance and the Central Bank of Nigeria, besides, since when have financial experts become security apparatchiks.
SWF AND WHY WE LAMENT
Last week, many in the financial industry, where expressing happiness with what has became of the Sovereign Wealth Fund (SWF), how it achieved commendable profit while serving as a back-up fund for infrastructural financing. They also wondered why the Nigerian Governors Forum (NGF) opposed it and even litigated against it, well, it is because the economic management team of the past administration, have not explained the policy to them, educating them of the benefit that stands to accrue to them, mind you, the Nigerian Governors Forum (NGF), was mostly populated by governors of the same ruling party, thus, how could they have cut their noses to spite their faces.
Basically, this is why we lament, when we had massive oil revenues, it was not saved neither was it invested, simply because the economic managers cannot communicate, nor stoop down to engage with the governors, on positive policy matters that could drive the Nigerian economy forward. Principally, this is why the present administration laments, because opportunity once lost, can never be regained.
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