DEREGULATION, THE DEVILS ALTERNATIVE



I owe to my country to submit the bitter truth about final the deregulation of the downstream petroleum sector. Mind you we're talking Economics here, not Legal or political issue. In 2011, Nigeria depleted the excess crude account, withdrew massively from the external reserve and borrowed locally to finance the subsidy. The labour demanded for and got the minimum wage across board, the government have to pay through its nose. We have our president to blame for not having the Federation balance sheet published. We have the GEJ led administration to blame for not showing enough patriotism by reducing the overheads of public officer holders and the security votes in 2012 appropriation bill despite the fact the finances of the State is in state of mess. GEJ cannot just choose to inflict hardship on Nigerian for no just cause. For what reason? He just did not know how to convince an average Nigerian of his sincerity. We all be believe and know politics and public office holding is the cheapest route to affluence. Prior to now we voted in leaders partly because we believe its our civic right. So we don't trust them as the agent change we need. Mr President has been singing it that it would be the rate determine painful step to our economic liberty, no ones seemed to pay attention. My people perish for lack of knowledge.

Now what the labour and the activist need is enlightenment. They need to ask questions on how the removal will work? A typity was what happened in the telecom sector in 1999 when a SIM card sold for 35,000NGN.
Fellow Nigerians let me submit here that deregulation is a necessary evil and as far as our Economy is concerned capitalism is the best alternative. In the oil sector,the federal government has agencies like DPR and PPRA whose roles are regulatory as in the role of NCC in the telecoms sector.

Here is the brief analysis of how the economy will fare in this post-subsidy era. The prices of goods and services will rise, initially. Now because fuel is not the only input we have in utility creation the percentage rise in average prices will be less than percentage increase in fuel price. With the minimum wage and increase in the average wage of Nigerian the inflationary effect would have been cushioned. By the time we have stable electricity we would only need PMS to run fewer and fewer machines. As investors move to rapidly to the refining sector that would have been attractive by then, more jobs would be created.As more and more refineries spring ups healthy rivalry(perfect competition) would have set in, and this would force the price of PMS down to well below 100NGN / litre . Moreso that the cost of shiping to and from refineries overseas would have been eliminated. The cost of labour would definitely the paid to Nigerian! And of course refining locally would make all fractions obtained from crude oil available at cheap rate in Nigerian market!
I doubt if these activist are illumed about what we have missed over the years by refining the black gold outside Nigeria. Here are the immediate fractions:

Liquified petroleum gas (LPG)
Gasoline (also known as petrol)
Naphtha
Kerosene and related jet aircraft fuels
Diesel fuel
Fuel oils
Lubricating oils
Paraffin wax
Asphalt and tar
Petroleum coke

Oil refineries also produce various intermediate products such as hydrogen, light hydrocarbons, reformate and pyrolysis gasoline. These are not usually transported but instead are blended or processed further on-site. Chemical plants are thus often adjacent to oil refineries. For example, light hydrocarbons are steam-cracked in an ethylene plant, and the produced ethylene is polymerized to produce polyethene. Imagine! All the Electronics companies in the world use PVC casing derived from crude oil! All our phone, electronics, cars etc all have crude oil products and derivatives in them all our polythene bags, our synthetic fibre clothing materials. I doubt if the labour unions know that the hair attachments and weave-ons are from the petroleum products. All these cars that are running around have at least five litres of lubricants in them. Why don't they protest against that?
Last year or thereabout Dunlop closed down as a result of high cost diesel that has been deregulated prior to now and no one protesed the loss of thousand of job and mandate the FG to provide the company with stable electricity. Meanwhile synthetic rubber which is alternative to natural rubber can be gotten from refining crude oil locally.
Our tyres,electric cables insulators, shoes etc are made of synthetic petroleum products and no one protests. Thousands of shops are closing down for lack of stable electricity and no one is protesting.

Our problems are lack of infrastructure especially ELECTRICITY and others like good road networks. The almighty CORRUPTION that has eaten deep into the mind of an average Nigerian would not allow speedy development of basic amenities. Lack of INDUSTRIAL DEVELOPMENT development due to importation( very soon we will be importing bottled water!) The deregulation will touch all these issues, although it might not be able to fully address them.

Let’s talk about Labour unions. ASUU members should be ashamed of themself. What contribution have they made since 1960? We all depend on foreign technonology!. This is a time of reflection. What are the public servants doing? Nothing . What are the publc school teachers doing? Is everyone doing his bit well? Look @ the police. Are we expecting GEJ to perform magic? Where is NITEL, NIPOST, NRC, FRSC, Nothing public is working! Why is it that government is don’t run any business successfully here? Nigerians run it down. Now it’s the time to deregulate every sector of the economy!

I tell you most filling station around here are selling the fuel they lifted and hoarded about a month ago at post-subsidy removal price now. The question is; is it GEJ that told them to sell at that super-profit rate? No. Nigerians are taking advantage of Nigerians and we're blaming the government. Our major problem is corruption. Corruption is part of our system in this nation, from the the peasant to the presidency. The cartels that are importing this PMS and benefiting from it; don't NLC know them? For over 50 yrs that we have been subsidizing PMS what progress have we made? Nigerians should know that the economy of the world has changed. We must sacrifice for a while in order to reap the long term benefits. And President GEJ, how can you convince Nigerians that you're sincere when you budgeted 1BILLION for food?


And now today he reduced public servants’ pay by 25%. How responsive do you want him to be?
We asked for minimum wage he granted it. What else do you want him to do?



Now I urge you not to protest ignorantly against deregulation. Rather I urge you to vote this government out if at the end of 2012 we do not have our roads been fixed, power sector being deregulated, our trains back on track. For God's sake ten of thousands jobs are to created at the Railways Corporation.

On the final note, I am confident that majority of the protesters do not have access to data on the long term and 'eternal' benefits of deregulation, while some are aware and are just interested in the publicity the protest would give to their political ambition. Nigeria is ours. If we allow this powerful cartel to run down the economy by getting 1 trillion NGN annually from FGN under the guise of subsidy and parading themselves as the African richest men ( Mind you it is the same cartel that defrauded Nigerian in the stock market a few years ago through price fixing and the naive labour failed to protest), if we do not trust GEJ enough( despite voting for him) to deregulate the determinant sector of our economy, he will obey the masses who voted him in as a true democrat, embezzle as much as he can ( like his predecessors), leave the economy in a state worse than he met it,and the economy will end up where it is heading:ruin!
( An Article tiltle; DEREGULATION THE DEVILS ALTERNATIVE by Biodun Oja)