The fuel holiday is not ending
I will do thanksgiving today in church. For the first time in more than a month, I drove into a filling station, precisely Mobil Filling Station on Airport Road, Lagos and bought fuel without spending even a second for cars ahead of me to be filled first. I just drove in, leveled with the pump and the nozzle was in my tank. Yes, just like that and I felt God should be thanked and praised for His mercies and goodness.
If you recall, I noted last week that the observance of my fuel holiday would continue in my village. So it was. But first, leaving Lagos for Oghara Agbarha-Otor by air via Warri on December 29, 2017 was not as straightforward as getting to the old domestic wing of the Murtala Mohammed Airport and boarding Arik Air flight W3 630. Departure was 8.40 am but the night before, the airline had sent a message shifting the time by one hour pleading bad weather.
Dutifully, I was at the airport well ahead of time. But at about 12 noon, the announcer said flights to Warri on that day had been cancelled due to bad weather. I began the analysis. One option was to call off the trip altogether and another was to mobilize and hit the road or go by public transport. I couldn’t abort the journey because my parents were waiting in anticipation.
Going in my car would bring me in direct confrontation with the prevailing monster called fuel scarcity. If I was able to manage the Lagos end for take-off, what about the Delta end upon my arrival? There were other negative incidentals like the possibility of filling the tank with toxic fuel at any of the many filling stations between Sagamu and Benin-City. Going alone was better. At about 1.00pm, I was at Effurun Round-about disembarking from the Toyota Siena car that brought me from Lagos. I called a contact at the airport in Lagos to know how far. He said the Warri flights for that day (December 30) were also cancelled. I thanked God for deciding wisely.
As I continued to Oghara Agbarha-Otor through Ughelli, I noticed that all the filling stations on the Effurun-Ughelli end of the East-West Road were dispensing fuel without traffic build-ups. You could drive into any, get fuel and leave as it was in normal times. Also the stations on the Lagos route, after Ijebu-Ode, operated normally and nothing about them suggested the hell that motorists were experiencing in Lagos and Abuja.
Soon, the puzzle was cracked. The stations operated a different price regime within a band that ran between N200 and N250 per litre of petrol. The Department of Petroleum Resources (DPR) which was everywhere in Lagos and Abuja shouting down filling stations that were either hoarding products or selling above approved price was nowhere these zones to ensure compliance. It was the closest description to a fully deregulated downstream sector and what industry players called right pricing. Petrol flowed and entered cars on demand and payment of the right price.
Major marketers and NNPC mega station in Benin-City which pretended to be law abiding and doing business as stipulated were inundated by the arising confusion from wrong pricing. I struggled to make good meaning from the opposing scenarios. Did the petrol being sold by these margin stations at high prices come from Mars? Altogether, these were operators without the financial and structural capacity to bring in products from the international market and distribute on their own terms. Yet they were here succeeding spectacularly where NNPC and the majors had failed woefully.
The fuel they sold at about 60 per cent mark-up would have come from the same source with what NNPC and major marketers sold at regulated price of N145 per litre. They had fuel and sold non-stop but NNPC and the major markets rationed their supply with single pump at stations with multiple fuel pumps and in the process inflict pains on motorists who queued for sometimes days to access fuel at N145. The explanation is simple. This largely indeterminate bunch of downstream small operators spread across the country has become a ready platform for government and the NNPC to test run full deregulation of the sector.
The issues that define the downstream have not changed. They are the near absence of domestic refining capacity and the consequent dependence on importation of white products for domestic consumption, the vagaries of the foreign exchange market and International prices of crude oil. So far or at least since May 29, 2015, changes along these curves have made continued regulation of the sector appear unsustainable. From 170 in the beginning of 2015, the naira has depreciated to 305 to the dollar and from about $40, crude oil has rallied to $67 per barrel. What is more, domestic refining capacity has not climbed beyond zero amid these vagaries.
This is the reality that Petroleum Resources Minister of State, Dr. Ibe Kachikwu has been trying to explain to Nigerians in rather too many tongues. Characteristically, he had wrapped the truth in sophistry when he had opportunity to explain to the Senate committee on downstream. He gave three recipes for ensuring steady supply of petrol in the domestic market. One is to bring back oil marketers into the fuel importation matrix and arrange with the CBN to offer forex for this purpose at a rate that would ensure the N145 per litre cost of petrol. Right now, according to Kachikwu, the landing cost of petrol without even marketers’ mark-up is N171 per litre which translates to a subsidy of N26 on every litre of petrol consumed.
The other option is what he calls plural pricing which is a situation where government through the NNPC and marketers will import products and sell under separate price regimes. While the former through its sales outlets nationwide may sell at N145 per litre, the latter will be allowed to sell at a price that guarantees their operations. The third is full re-enactment of the subsidy regime. None looks sustainable because all three options are short of full deregulation of the downstream sector.
Meanwhile, it is now full circle with Buhari and the APC. What happened in the house of the hen is happening in the house of the cock. While in opposition, they occupied Nigeria when at more $100 per barrel, former President Goodluck Jonathan increased pump price of petrol from N67 to N140. The price was adjusted down to N97. When crude oil came down to $47 per barrel, the pump price was further reduced to N87 in January 2015 under Jonathan.
The then APC opposition condemned the move as a gimmick by the ruling PDP to win votes at the general elections which were less than two months away. Thankfully Buhari and the APC came in after the election. But at just $45 per barrel of crude, the Federal Government under Buhari increased pump price of petrol from N87 to the current N145 per litre in May 2016, about a year after forming government. No street, not even a footpath in Nigeria was occupied by the Nigeria Labour Congress (NLC) and sundry civil society groups on account of the sharp increase in the price of petrol. The regime also boasted to have abolished subsidy payment to petroleum marketers by the increase.
It was a grand deception and everything Kachikwu and other government functionaries including Vice President Osibanjo have been saying since the start of the current fuel scarcity about five weeks ago is to deodorize this deceit and make it look like an administrative master stroke by the Buhari regime. It is crumbling in their faces in spite of their best efforts and the suggestions by Kachikwu the other day at the Senate could very well be translated thus: “Sorry folks, we thought we could sustain the magic. But we aren’t magicians and so we are going back to where we started – subsidy payment or full deregulation.”
Let me sound here that Kachikwu’s option of plural pricing which will make the NNPC outlets sell petrol lower than other marketers is big fraud against the people of Nigeria. Under it, petrol will be perpetually scarce in all NNPC stations and readily available in others where it will be sold at a so-called realistic price. Also, to tell the CBN to fund importation at a ridiculously low exchange rate is madness. The rising foreign reserves with which the CBN has stabilized the naira in recent times will be wiped off in months and the domestic currency shall return to a free fall.
The hard but sure option out of the quagmire therefore is complete deregulation. It is a difficult word to pronounce because it means more hardship for citizens. Not even Buhari has been able to pronounce it which was why he came on national television on New Year Day to say products hoarding by dubious marketers was responsible for the lingering scarcity. And all the pedantry that Kachikwu has deployed in public presentations since the start of the fuel scarcity is to avoid the effective pronunciation of ‘deregulation’ especially in a year before election year.
All said, it is strange that the Federal Government lacks the courage to make this simple pronouncement. The whole thing about selling petrol at a regulated N145 per litre happens only in Lagos and Abuja. Elsewhere in the country marketers have largely set their own rules. I am saying Nigerians outside these two locations have been operating in a deregulated downstream and it will not mean much to them if government is coming belatedly to proclaim deregulation.
In fact government should not be timid about this. There are no longer counter voices to protest government’s pronouncement of full deregulation. The NLC and all the civil society groups including a certain professor and a fiery Lagos lawyer who would have protested loudly lost their voices from shouting the PDP out of government in 2015. And so, no time is more auspicious to decree deregulation of the downstream than now.
Until government finds the courage to do this, the fuel holiday continues. I will be praying to be intermittently lucky to drive into a filling station, recharge my tank without hassles after which I will follow up with thanksgiving in church.
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