8 November 2009
editorial
Lagos — There are regrettable flaws in recent government moves to deregulate the downstream oil sector. The cost to the nation is equally regrettable. When on October 10, Mr. Aminu Babakusa, the Group Executive Director, Commercial and Investment of Nigerian National Petroleum Corporation (NNPC), announced November 1, 2009 as the date for commencement of the full deregulation of the sector, he could only have been speaking in his master's voice.
Babakusa was in Lagos to inspect facilities of private petroleum marketers in readiness for the take off of the exercise. About the same time, another top official of the NNPC led a delegation to the northern parts of the country to "inspect facilities and prepare the nation" for the take off of the deregulation. He also said November 1 was the D-day.
Soon after that, Minister of State for Petroleum Dr. Odein Ajumogobia confirmed that government was going ahead with the deregulation. That was despite identified flaws of the exercise argued frantically by those opposed to it.
As the oppositionists perfected a resistance strategy, the rest of the nation prepared for the worst. In February President Umaru Yar' Adua approved the recommendation of the Presidential Steering Committee on the Global Economic Crisis for the deregulation. It had been followed by the setting up of a committee to drive the process. So there was no going back.
But about two weeks after Babakusa spoke and as the majority of Nigerians waited in trepidation, Labour and Productivity Minister, Mr. Adetokunbo Kayode, denied the November date. At a news conference he said that the November 1 date for the commencement of full deregulation of the downstream oil sector did not originate from the government. Kayode told journalists that at no time did President Umaru Yar'Adua or any of his ministers directly connected to the issue make such an announcement.
Although what appears to be a postponement has brought some relief to Nigerians, Mr. Kayode's explanation is less convincing. The earliernews was credibly attributed to Babakusa, who is not a junior staff of the NNPC. He is an Executive Director in the corporation. The announcement was not denied and we are unaware that Babakusa has been punished for it.
If that was an exercise in kite-flying, we regret to note that it was a costly one. The announcement led to immediate disruption in the supply chain of some petroleum products, returning long queues to filling stations and unauthorized price increases. In trying to check these abuses, staff of the Department of Petroleum Resources have been deployed in the streets. The opportunity cost of that is the work they could have done in their offices.
These are some of the negative announcement effects Nigerians are well aware of. As the NNPC has also explained, the proposed deregulation is the reason they barred independent marketers from importing petrol. They consequently made a huge monopolist out of the corporation, creating the inadequacies, abuses and corruption, which have been the subject of a heated controversy.
We believe that if anything has been gained in the false step of government, it is the clear indication of the vehemence of the oppositionists such as Labour. To date, hoarding of petroleum products and other abuses continue in some parts of the country.
While we agree that government has a compelling economic case for deregulation, there are equally strong social issues to be addressed. With the high level of poverty and deplorable living conditions in the country, the argument of many that petroleum subsidy is the only thing they enjoy from a commodity with which the nation has been blessed, cannot be ignored.
With the false move, government also breached the trust between it and the ruled. A people must, out of consistent behaviour, have confidence in any word from government. Since the development of a country is a collective effort of its people, and not only of the leaders, trust is a vital element of governance.
As we have also stated on this page before, government's argument of its intent to stop some crooks from enriching themselves from the subsidy on petroleum products would have been better appreciated with the deployment of the Federal might in fishing out the criminals for punishment. Its inability to do that has reinforced the belief that such individuals may be in government and related government agencies.
Further, the denial by Kayode, without a definite date for the commencement of deregulation, has made many people to live in uncertainty and fear, while abuses of the system continue.
We therefore call on government to come out clearly about its plan for deregulating the downstream oil sector. We recommend that the plan should include adequate stakeholder engagement.
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