KING Sonny Okosun of blessed memory has as one of his favourite songs, ‘which way Nigeria, which way to go…. I love my fatherland…which way Nigerians, etc.” A recent text message by one of the Banks, Skye Bank, further endeared me more to banks. In its concerted effort at implementing relationship marketing, it sent me a message. Part of the content explains both the international and national events that will determine the activities in the year 2012. It states: “Certain policies from 2011 are expected to take effect in 2012.”
First is the power sector reform through privatisation of the Power Holding Company of Nigeria (PHCN) and its subsidiaries. This is expected to stimulate growth in the economy through Foreign Direct Investments (FDIs), and promote employment generation, with the deregulation of the sector. It should go without saying that it would bring about increase in Federal revenue and savings, etc.
Secondly, the government deregulation of the oil industry. While this remains controversial, it is clearly an issue which the Federal Government is keen on pursuing. The arguments for and against the implementation are raging, but its effects would clearly have an impact on the economy. The spill over effect in the decision that would be arrived at would determine how citizens would spend or save in 2012.
The enabling Privatisation Decree No. 55 of 1988 defined privatisation in section 14 as “the relinquishment of part or all of the equity and other interests held by the Federal Government or its agency on enterprises whether wholly or partly owned by the Federal Government”. It went further to define commercialisation “the reorganisation of enterprises wholly or partly owned by the Federal Government in which such commercialised enterprises shall operate as profit making commercial ventures and without subvention from the Federal Government.”
Odife Dennis (1998) in an article, Privatisation in Nigeria, saw it as the transfer of sale of government interests in companies, corporations and/or parastatals to individuals or organisations.
The related concepts of privatisation which are gathering currency in the oil and gas industry are commercialisation, liberalisation, deregulation, and social enterprises. For the purpose of this essay, I will define deregulation as “Reducing the level of Governmental intervention in the production process”. More specifically now in the oil and gas industry.
All the concepts are leading us to one fact that the Federal Government’s business these days is to govern and it is learning how not to involve itself in other diversionary activities capable of keeping it out of the track of good governance. Good governance involves the maintenance of law and order, aspiring to maintain political stability and the provision of basic infrastructures conducive for business investment for local, national and foreign entrepreneur to guarantee productive activities for the economic and social well being of the citizenry.
This concept of deregulation allows the private sector to provide those goods and services normally monopolised by the government. The success or failure of the private individuals will depend solely on their ability to serve the members of the public better and satisfactorily. This will lead to competition and choice to benefit from the consuming public. It will lead to reduction in government budget and relieves her of the burden of undertaking those ventures. The marketing concept is a more acceptable history of exchange activity. It holds the key task of the organisation either in public or the private sector to determine the needs and wants of target markets (in this case oil and gas products) and to adapt the organisation to delivering the desired satisfaction more effectively and efficiently than its competitors.
The concept simply says “find wants and fill them” rather than “create products and sell them.’ The underlying premises of the marketing concept are consumers can be grouped into different segments depending on their needs and wants.
• The consumers in any market segment will favour the offer of that organisation that comes closest to satisfying their particular needs and wants at an affordable price.
• The organisation’s task is to research and choose target markets and develop effective offers and marketing programmes as the key to attracting and holding customers.
Having explained these concepts one is in a position to understand why attention has shifted from the Federal Government to the petroleum marketers in the price determination controversy. The government excuse has always being that it wants to deregulate the downstream sector of the oil and gas industry, and totally remove oil subsidy, thereby mopping up funds and curtailing corruption.
This year, 2012, to be or not to be, is becoming an important question and mantra, both for the government and the governed, because all the arguments of present are tied to the withholding or not of the oil subsidy. Government in its efforts to remove the oil subsidy (as if it has not been removed before) has promised the masses all manners of heaven on earth. From free air, to free food, transportation and medical care, all tied to the controversial oil subsidy.
The organised labour, the masses and the down trodden have on their own vowed to resist the removal and promised the government a Nigerian version of the Arab Spring. The two opposing sides, the government and the governed, according to Eddie Mbadiwe, are so intransigently pitched and do not understand each other. Only vision and wisdom according to Eddie can intervene and avert what could erupt in a conflagration, the magnitude of which this nation has not yet seen. Nigeria has seen a civil war, not a “Nigerian Spring”. Will this almighty oil subsidy bring about that revolution? Only time will tell.
In the past and now, there have been arguments for and against the removal of oil subsidy. Each time the government needs more funds for its political campaigns and other activities, a name is always given to oil subsidy. In the past we have heard of deregulation of the downstream sector, liberalisation of the oil sector, commercialisation and deregulation, all tied to the provision of social amenities for the masses. The argument by the government is that it costs them more than N70 to produce and deliver a litre of petroleum product to the masses, while the same masses pay a lower price to obtain the same product.
Business is not run at a loss and no business person goes into business to do just that. The fact remains that if the government cannot successfully produce and sell at a profitable level, then it has no business doing that. The government is supposed to provide security, the enabling environment and the infrastructure and then allow the private sector to run businesses.
Why is it that all past increases in the pump price of petroleum products could not provide that much desired and often advertised social amenities from the military regime of General Ibrahim Babangida to our current President Goodluck Jonathan? Why have all previous governments increased this pump price without providing the basic infrastructures? Why is the subsidy removal so dependent on road transport as against the provision of alternative rail and water system?
The answer is not too farfetched from the terrible corruption and bribery in the oil industry. Other causes are as a result of bunkering, smuggling, porous and unprotected borders, dishonesty, stealing, and collaborative activities by those in government and their civilian hangers on (cabals). This has made the price of our subsidised oil to be sold for a higher amount across the Nigerian borders. Our African neighbours get our cheap fuel through the Nigerian smugglers. Who is to blame? Honestly it cannot be the masses that will suffer the brunt of human greed. The masses do not have the resources to smuggle either on a large or small scale.
Because oil is a natural endowment in Nigeria, many citizens see it as a natural right, considering the fact that other oil exporting countries in OPEC such as Quatar, Saudi Arabia, Libya, Kuwait and Iran sell their petrol at less than N70 per litre. Why should Nigeria’s pump price be higher than the above mentioned countries, who have very functional refineries that supply their domestic needs, while Nigeria, is producing at less capacity and depends on importation to satisfy the domestic demand. Subsidy on kerosene will remain, so says the Petroleum Minister, Deziani Allison Madueke. The fact remains that even with the so called subsidy on kerosene the very long queues still abound, and the much desired kerosene is hardly available to be bought. The reasons given by the government on the unavailability of kerosene cannot hold water. If a product meant for the poor masses is eventually used as aviation fuel by the airlines in Nigeria, is it the masses that have to bear the blame? The answer is a capital NO. The security and distribution operatives in Nigeria must bear the blame.
With the ASUU strike lingering, a question of an idle hand being the devil’s workshop, with unemployment still high, high level of insecurity occasioned by Boko-Haram, armed robbers and militants, resistance by the organised labour, civil society groups, students and the masses, any withdrawal of petroleum products will definitely be resisted and mighty lead to a revolution or “Nigerian Spring”. Certain issues in any society bring about a change and oil subsidy might just be what Nigerians are looking forward to as catalyst for the much desired change. Nigerians definitely will not totally go against future price increases as they have accommodated in the past, but the present timing of the removal of oil subsidy is inappropriate. It should be done in phases, and must start at a much more future date in 2013. Basic trust should be built by the government and the governed and other issues of national important must be solved.
Positions continue to harden on both sides between the masses and the government. The Federal Government set January 1, 2012 as the removal date of the oil subsidy, so that it could mop up sufficient funds for the provision of the so called social amenities. The organised labour, civil societies and the student activists were smarting for a major “Nigerian Spring”, a major fight and disruption of the economic activities in the country. The President and his team of economic advisers on their part have intensified their dialogue and consultations. The fact remains that the trust between the government and the governed has reached an all time low, because of experiences where promises were made, only to be jettisoned by the government as can be seen from the national minimum wage issue and the ASUU 2009 Agreement with the Federal Government Negotiation team.
•Ayozie Daniel Ogechukwu, a lecturer, wrote from Ilaro
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