There is fire on the Nigerian mountain beyond the current brouhaha over the recent increase in the price of petrol by the Federal Government. The attendant fall-out of the crises that would flow from the maturity of the complications would put the country on the tenterhooks that has never been witnessed before.
Snippets of the impending fuel chaos emerged when fuel marketers under the umbrella of the Depot and Petroleum Products Marketers Association of Nigeria (DPPMAN) met with the Minister of Finance at the headquarters of the ministry.
The News Agency of Nigeria (NAN) had reported that the meeting, chaired by the minister, was attended by Chief Executive Officers of 46 major oil companies in the country and held to discuss salient issues affecting the downstream sector of the petroleum industry.
The Chairman of DAPPMAN, Mr. Dapo Abiodun, told the minister that members of the association were currently having a tough time converting some of the Naira payments made by the government to dollars.
He said their inability to convert these payments from the Federal Government from Naira to dollar was making it difficult for them to meet their obligations to their foreign partners.
He said while the oil marketers would continue to do their best in importing petroleum products into the country, the unavailability of foreign exchange might make it challenging to achieve such objective.
“We look forward to dialoguing with you as to how you can help us expedite the sourcing of foreign exchange to liquidate our exposures to our foreign bankers that we have line of credit with.
“We are very worried about going into a new dynamics in which marketers are now going to be sourcing forex at the rate that they can find, which we have approximated to around N285 to a dollar.
“We believe that it is a quick fix solution to all the epileptic supply of petroleum products in the county.
“However, we still have this Naira sitting in our account from previous transactions and we are worried that if anything happens to the rate of exchange officially, we are going to be caught in between.
“We do not want to come back to you to ask for foreign exchange differentials which issue we still have pending from previous transactions,” he said.
The implications of these statements should be obvious to those who can see ahead that the simple minded who have hailed the recent price as deregulation are totally of what different officials of government have canvassed positions that would make you think they are representing many governments.
While Ibe Kachikwu said he is “deregulating” the sector, Vice-President Yemi Osibajo says it is price increase with Alhaji Lai Mohammed telling us it is a fallout of the brokenness of our country.
Unless government is able to address some of its other ill-thought out policies that have created a forex crisis, the fuel regime will soon grind to a complete halt in the next three months and that would create its dislocations.
A staunch supporter of the administration, Prof. Tam David West, has lashed out at what it is doing and it is instructive. He wrote: “When I heard the minister of state for petroleum (Ibe Kachikwu), saying they smuggled our petrol across borders and that was the reason for the increase, it is nonsense. I used the word nonsense because during my time, we closed the borders.
“If I could do it, he could do it too; and it is the same head of state (Buhari). We ensured there was no petrol station several kilometres to the borders. Government would not approve fuel station that is close to the borders.
“Another illogicality of that argument is if you sell petrol in Nigeria for N150 per litre, the people across the borders are ready to pay N160; if you sell for N200, they are ready to pay N210. So, there will still be smuggling. So, increasing petrol price in Nigeria does not stop smuggling.” He noted further that “the fuel price increase is confusing.
“A government official said it is subsidy removal, which is not. Another one says smuggling, which is untenable. Foreign exchange (Forex) was also mentioned, which is partially tenable because the country’s foreign exchange has gone down drastically. So, it is so difficult now to source forex to import fuel. If I am into managing of oil and foreign exchange goes down, why should a man on the street pay for it?
“No matter the reason, N145 per litre is not justified. If they removed all the unnecessary additions on the price of petroleum such as bridging or Petroleum Equalisation Fund, dealer’s margin, transporter’s margin, retailer’s margin, storage, depot margin, and NPA charges, petrol price will come down to N40 per litre.”
The more things change in Nigeria, they unfortunately remain the same. Otherwise we would not have been locked in this fuel importation regime in spite of the pre-election promises to fix our refineries.
Why has refining petrol become a rocket science when countries like Ghana, Niger, etc, are not having such challenge ?How is it that a country whose soldiers destroyed 600 illegal refineries in the Niger Delta years back cannot have one functional refinery? A sensible country would have created an industrial cluster around those refineries instead of destroying them.
It is common knowledge that it takes between 12-18 months to build modular refineries and yet we have spent a year out of four in rigmarole doing more of the same.
The irresistible conclusion is clear and it is that Nigeria as it is has exhausted its potential. It is a dysfunctional country that is no longer useful in its present form. It has to embrace a new structure that would allow its constituent units to use their creative faculties to solve the problem or it dies off.