T he Managing Director of Vertex Energy, Mr Segun Olujobi, has said that fuel subsidy removal is the only way to attract investors into the industry and save the economy N1.3 trillion being expended on fuel subsidy (as at October 2011), stressing that it is the easiest and fastest route to corruption.

Speaking recently at a forum on oil subsidy in Lagos, Olujobi noted that fuel subsidy is a way of living above means, because “we are using reserves instead of building it, even when oil prices are going up.”
He noted that the business of fuel importation is a business which profit is guaranteed and this, according to him, is not in conformity with every normal business, since it encourages a lot of fraud, adding that it is one of the biggest means of political patronage.

He said private investors cannot come and build refineries until there is cost effective charge on petroleum products, just as the power sector cannot attract investors that will fix it if there is no cost effective tariff on it. “As long as the price of petroleum is regulated no investor, be it local or foreign, will open up a billion dollar refinery in Nigeria,” he maintained .

Olujobi, who is a consultant, Africa Capital Alliance, Nigeria; as well as Board Chair, LEAP Africa said the refineries cannot work because the infrastructure is not there to support it and as long as the petroleum cartel is benefiting, no refinery can work and Nigeria cannot build refineries before removing fuel subsidy.
“As it is, the cost of local refining is higher than the cost of imported products. So even if we have most efficient petroleum industry in Nigeria today, with fuel subsidy in place, we will still pay more than 80 per cent of what we pay for the petroleum products. For the fact that pipelines are vandalized and could not work efficiently, the cost of local refining is more expensive,” the Vertex energy boss revealed.

With 2.4 million barrels of crude oil a day, he noted, Nigeria do not have enough crude oil compared with countries like America, Libya, Russia among others; which makes the country the poorest of all the OPEC countries. According to Olujobi, the debate should not be whether the country should remove fuel subsidy or not but how to apprehend those stealing “the little money we have. “Poor countries said Olujobi, don’t subsidize, they make sure they utilize every dollar they make,.”

Reacting to the argument that other countries subsidize petroleum products, he said that Algeria, Libya and other countries subsidizes petroleum products but they are not confronted with such problems that Nigeria faces. For instance, “they are not battling with corruption, poor infrastructure, leakages across the border due to neighbouring countries that feed fat on them and cause the subsidy to be enjoyed by a few.”

At least 25 per cent of petrol we import to Nigeria is not used in Nigeria but in other West African countries. “We are the father Christmas of all these countries because petrol officially cost less in Nigeria which encourages smuggling. Diesel he added, is N150-a-littre, kerosene is supposed to be N50 a littre but if you can blend it, kerosene can be sold at the cost of Diesel. “In Nigeria we don’t catch criminals so there is no incentive to behave yourself,” the oil expert lamented.

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