Akoma Chinweoke
24 August 2008
interview
The escalating price of diesel, scramble for kerosene and fluctuating prices of petroleum products no doubt have further impoverish the people. As the poor masses continue to endure the burden of this seemingly unfavorable policy of the leaders, one would have thought that the government would
passionately address their worries by subsidizing further the energy sector which has been described as the engine room of the country's economic activities.
However, the reverse appears to be the case as the government is planning to put an end to the issue of subsidy, a step which many consider as uncalled for as there are fears that it would do more damage to a poor economy like ours. In this interview, Mr. Larry Segun-Lean, CEO of OilgasMarinetech, an indigenous oil development company takes a look at the implication of such proposed action by government and other unresolved issues in the sector. Excerpts.
WHAT is your take on the proposed plan by the government to remove oil subsidy by next year even as the citizens struggle to survive despite the oil wind fall?
The oil subsidy should remain because if the government removes the subsidy, it is like removing the life wire of the common man. The subsidy is actually helping the common man to still remain in business somehow. But by the time subsidy is removed, the level of poverty would be increased and people would find it extremely difficult to carry on with their lives. Then it would affect the social economic stability of the country and the security system in the country would get worse.
This is so because many people today who have one or two things to do either as drivers, okada riders and others in the transport system for example would have no option than to lay down that and start looking for other alternate source of income. So, subsidy should stay. It is the responsibility of the government to ensure that the citizenry are okay and if anything is going to happen at all, government should start refining petroleum products within the country because if we refine the products in the country, we would find out that the cost of petrol would be lower than what we are actually buying at the moment. Government should ensure that the existing refineries are working and possibly build more rather than importing finished products which is a drain on our foreign exchange reserve.
Talking about privatising the sector, one would have thought the excess crude oil revenue would have been channelled into developing infrastructure that are lacking, so that investors can come in without too much problems, do you think privatisation would work when the real issues are yet to be tackled?
You know sometimes, it is amazing that government is still interested in teleguiding the system. We all are students of history. We have known from time that in this country, when we say corruption is the bane of development, it is mostly rampant in the civil service and among the political elites. So, government should hands off some of those business concerns to private sector people. However, if that is not done we would continue to make provision in our budget for either turnaround the refineries or cash call for joint venture obligations which in many cases are the sources of corruption because by the time you bring in external auditors, the figures never tally. So, I strongly think that government should hands off some of these business concerns to the private sector.
On the issue of effectively utilizing the excess crude oil revenue, if you see some other countries that are taking advantage of what is happening today in the global oil pricing, countries like Norway and the Arab nations are actually ploughing back some of those revenues and using those revenues to empower their people. It is only in this country that, that is not happening. So, you begin to wonder what the problem is. In those countries they actually save the excess crude revenue and then use some to develop their infrastructure but in this country we don't get such reprieve or opportunity. But we all now that energy is key element of productivity either intellectual or physical. Without energy some of these things we are talking about particularly vision 2020, cannot be realised without adequate electricity, which would power the industries. Nigeria at the moment is experiencing de-industrialisation. People are no longer interesting in having industries. That is why you see people importing goods.
How soon do you think the country can end the huge loss of revenue through gas flare and it consequences on our environment which has been described as double as a jeopardy to the economy?
It is not possible to achieve zero flare even at any point in time, but it could be reduced gradually. We should give credit to former President Obasanjo's administration on the gas flare issue. Past governments never did anything about it. But the last administration came in with business in mind to ensure that we generate revenue from those being flared and towards the end of that administration, we were making over N5 billion dollars as regard revenue from gas flare which would have been a waste and source of environmental problem. So, we should give some credit to the last administration But the new administration must roll up its sleaves and ensure that the policy of zero flare is sustained. We should not play politics with it. The gas flare thing and the national content policy were great initiatives of that administration. So, for gas flare, we would achieve it by and large. However we need to be responsible to ensure that, that we achieve certain milestones on gas flare. These are gases that are escaping from crude oil production we can make money from it if government is determined and focused. But we cannot achieve zero gas flare in the next four years.
Finally, the citizens are worried that the government may further increase the prices of petroleum products soon and even worrisome is the scramble for kerosene and escalating price of diesel. Is that what deregulation ought to be.
I think government in Nigeria should start to borrow somethings from developed economics. All developed economics have ways of subsidizing their economies because if they don't subsidize you would be making your people to suffer untold hardship. However, subsidy must remain if we don't want a social dis-location.As the citizens pay taxes from their income to government, such revenue should be effectively utilized to improve the people's life style. So if governance must be meaningful, our government must be responsible.
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