This is a very good piece written and delivered in today's Leadership Newspaper. Please have a read

http://www.leadership.ng/nga/columns/9608/2011/12/05/fuel_subsidy_goes.html


Anytime from now, the fuel subsidy will be removed. President Goodluck Jonathan and his associates have made up their minds to do so, cheered and goaded by the World Bank and pundits from the West who insist that subsidy is so bad that it would destroy us. The president has also told us that if we do not remove the subsidy, Nigeria would start importing fuel from Ghana and Cameroon in 15 years.

Well, the president forgets that, actually, we currently import fuel from a nation like Singapore, a country that does not produce a drop of crude oil, and we are also probably just days away from importing fuel from Niger Republic, a country much poorer than Nigeria. Niger actually deliberately planned to reap from Nigeria’s poor management by siting its refinery, with a capacity far in excess of what they need, very close to our border. The Zinder refinery shall produce 30,000 barrels per day. The Nigeriens need only 10,000 daily; the balance of 20,000 barrels is meant for Nigeria. They intend to make a killing.

Subsidy removal or no subsidy removal, as long as the current level of corruption around government is not harshly dealt with, it will take much less than the president’s 15 years for us to start importing fuel from Ghana and Cameroon. In fact, I expect a very good government from some desperately poor countries like Burkina Faso to take advantage of our failed system and build refineries, import our crude, refine it and then sell back to us at a huge profit – exactly the same way Singapore does it today. Singapore currently refines two million barrels of crude daily even though it does not produce any oil.

The refinery in Niger was built by a partnership of the Chinese and the Niger Republic government. Why shouldn’t the Nigerian government do exactly that? The Chinese have been coming over here, buying up our crude and oil blocks. Why can’t all those who are currently preaching subsidy removal invite the same Chinese to the table and ask them to partner with us and build refineries here, and allow them to manage the plants, since one of the excuses the government gives is that they (the government) cannot run a public enterprise? Another excuse they continue to give is that when they award contracts for the turnaround maintenance (TAM) of our four refineries, the contractors steal the money and don’t do the work. They don’t even understand that one of the duties of every government is to punish such corrupt practices that affect the wellbeing of the people. In China, such contractors are executed and, in the United States, they don’t waste time putting handcuffs on such miscreants.

As for the western countries who have been goading the Nigerian president to remove subsidy on fuel instead of pressuring him to establish more refineries with better management, they would first have to stop the various subsidies in their own countries before they start teaching us about the economics of subsidy. Last year, a total of €39billion (thirty-nine billion euros) was spent on agricultural subsidies in the European Union countries. A total of almost 40% of EU’s budget goes to agricultural and fisheries subsidy annually. As for the United States, nearly $1billion (one billion dollars) is spent on different types of agricultural subsidies daily. In fact, a cow in the European Union countries receives more subsidy than a Nigerian. Countries choose sectors that are critical for them to subsidise and, if some countries would choose to subsidise agriculture, such countries do not also have the choice to tell us what to subsidise or not. Technically, the Chinese actually subsidise their currency, the Renminbi (RMB), and the Americans have been complaining about that, as usual. But the Chinese leaders insist on acting in the best interest of their people.

Besides, no one is really asking for any real subsidy as long as the refineries would be built here. If the refineries are built here the same way that the Niger Republic government has just built theirs, Nigerians would be buying fuel at a price without the cost of freight that the government defrays, which it calls subsidy. And if we build refineries, millions of jobs would be a bonus. So, let all government functionaries who have been evangelising about fuel subsidy removal turn their energies and oratory towards the establishment of refineries around Nigeria.
The president and governors are hell-bent about the removal of subsidy because there is no longer cash to run the government, and nobody is asking where the cash has gone. The cash, of course, has gone into purchases of large properties in Asokoro, Maitama, Wuse 2, Ikoyi, Victoria Island and other choice cities around the world. If the Jonathan government would do a census of the ownership of all the properties in Maitama and Asokoro alone and see those who own them, even the president himself would be alarmed. Ninety per cent would not be owned by businessmen. If they don’t belong to political officeholders and civil servants, both serving and former, then, he can go ahead with his fuel subsidy removal and people would applaud.

The list of the beneficiaries of subsidies was released by the Senate on Friday and published by the newspapers; we need to check whether government functionaries do not regularly build their own bribes into the invoices they submit in the name of subsidy payments.

Nigerians do not appear to believe the president about the reasons he has been advancing for the need for fuel subsidy removal. The president said the proceeds would be used to build infrastructure. Nigerians believe the money would be stolen by the civil servants and politicians again. Nobody says President Jonathan is corrupt; at least I have not heard people say so. But people talk about the massive corruption that goes around his government that the president is yet to show any inclination at.

The president and his people keep threatening us that if they don’t remove the subsidy, the economy would collapse. The president obviously doesn’t know that, for most Nigerians, the economy has collapsed already. So has the administration of government. Most Nigerians have not had a paying job for as long as they can remember and the government doesn’t discuss it as we see in other countries. People cannot send their children to decent schools and the public hospitals have all but collapsed. Insecurity is at its highest. Last night, a gang of armed robbers held Azare to ransom for three hours in the wee hours of the morning with bombs, raiding two banks and police stations. Armed robbers now operate with bombs.

A few days earlier, a group of people suspected to be Boko Haram members held Damaturu, a Nigerian state capital, to ransom in the same manner, killing more than 200 people in one night. The police headquarters in Abuja has been bombed, as has the UN headquarters in Abuja.
The question that many Nigerian would ask the president in his bid to remove the fuel subsidy is: what happened to the money that has accrued from the removal of the subsidy on diesel? The Yar’Adua/Jonathan government removed the subsidy on diesel in 2009 and we know that it is the diesel that virtually powers the nation today and not NEPA. So what happened to the huge amount that has been saved from the subsidy removal? What infrastructure have they constructed? The diesel subsidy removal probably gave the opportunity for more public servants to acquire more properties in Maitama, Asokoro and Wuse 2 in Abuja.

My advice to the government free of charge is this: Enter into an agreement with the Nigerien government to supply its excess 20,000 barrels of fuel daily from Zinder Refinery as quickly as possible. That should supply parts of the north. The government should then enter into the same arrangement with the Chinese company that constructed the refinery, Lanzhou Petrochemical Company of China, to construct several of those refineries in Nigeria and manage them. By the time that is done, businessmen would only need to lift from different points and sell to the public and not have to import from abroad. But the government should also note that it will not sell crude at the same international price that it sells to outsiders to these local refineries. Foreign countries that export goods to us do not sell at the same export price to their own people. The subsidy in that case will not be in the form of government heavily paying out cash to its businessmen as it currently does.

If the West subsidises agriculture heavily, let us also subsidise fuel because fuel is at the heart of everything in Nigeria. Yes, we should subsidise Nigerians and not the fuel cartels, who are mostly hands-in-glove with government officials to defraud the coffers of the state.

But all these would come to naught if the president does not start fighting corruption harshly. Like I once said on this page, a lot of money is being made and stolen from revenue generating parastatals of government. Much can accrue to government from NPA, CBN, FIRS, Customs, etc. Already, the Customs has already doubled its projected revenues. Many of them have not been audited for more than a decade. It is money from such agencies that Singapore, for instance, has used to become a developed nation.

The president should listen to good counsel. Even General Yakubu Gowon, a former head of state who managed the Nigerian economy for nine years including the civil war without borrowing a cent, has admonished him against proceeding with this subsidy removal. If the president is not going to listen to some of us, at least, he could gain from the wisdom of Gowon who was there before him.

E A R S H O T

The President Should Be Careful About Bayelsa

Bayelsa, the president’s home state, should ordinarily be a model of public order, but, after the PDP flouted a court order and went ahead to conduct primaries, excluding some of the president’s perceived enemies, like the governor, there has been tension in the state. The incumbent PDP governor in the state, Timipre Sylva, is also preparing to take part in the election and intends to flag off his campaign for re-election this week. He still has immunity and therefore cannot be molested by the security agents. He also has his own well-armed thugs, like most governors in Nigeria, I am told. And he also has tons of money at his disposal as a sitting Niger Delta governor is expected to have.

The stage is therefore set for a very messy confrontation that will obviously not follow any rules of civilisation, since the PDP itself was the first to flout the rules of civilisation – the court order. PDP is actually about embarrassing the president where it will hurt most – his home state.

@Beaf have a read please