Fuel Subsidy Removal: Fraud, Deception, Corruption or Good-intentioned?

by Akintokunbo A Adejumo

I will be very frank with you; despite the raging debates over the past six months or so, I had not the slightest intention of writing on this contentious and controversial issue of fuel subsidy removal in Nigeria until the Federal Government actually did it on 1st January 2012. One reason I did not want to is because I feel that deregulation of the petroleum sector is something that should happen, if only we have a responsible, accountable government and an efficient and less corrupt system with devoted, selfless, efficient, effective and honest government officials. But nay! Sadly we don’t have any of those.

I am of the opinion that if petrol sells for 65 Naira/litre in Port Harcourt and Bayelsa State, where our oil comes from, why should the price of the same petroleum be N65 in Maiduguri, Sokoto, Yola, Lagos, Ibadan, Jos, Minna, Abeokuta, Abuja, for instance? Aren’t there transportation and labour costs of moving any product from A to B?

Normally, and this is a BIG NORMALLY, removal of fuel subsidy and deregulation in Nigeria would have been a sound and valid economic development. But Nigeria, with our endemic official and non-official corruption, inefficiency, profligacy, mismanagement and undemocratic system, government can hardly be trusted to implement the gains of such removal and deregulation to the benefit of its 150 million people. We cannot trust the thieves in government, business and industry to transmute the gains into feeding us, providing basic infrastructure such as electricity, roads, healthcare, education, jobs, and general well-being expected of an oil-rich nation for its people. The government, at all levels, just cannot be trusted. Already since oil was discovered in huge quantities in our country, the man on the streets of Nigeria has neither seen nor benefited from this unique commonwealth. So how do we know we will, from the gains of oil subsidy removal?

And the government is not convincing either. They have not convinced us or demonstrated to us so far, how they will tackle or are tackling corruption in the oil sector and indeed in all the sectors of governance in the country. They have yet to tell us their action plans for the gains from removal of the subsidy and the palliative measures they have to ease the pains for us.

So the fraud called Petroleum/Fuel Subsidy Removal has at last been perpetrated on Nigerians? A fraud because the Government has not been telling us the whole truth. They have not even been economical with the truth; they have told us outright lies that even a baby will not believe. Or do they themselves understand what this is all about?

For instance, we were told our refineries are not working. This is an outright lie. Our refineries are in full working order, or at the minimum, can be made to work with some repairs, sincerity and commitment; but the insidious and invidious cabal profiting from the fuel subsidy are not making them work. And the Government knows it; they profit from it too.

So who benefits from the subsidy? Nearly everybody does except the masses of Nigeria. The cabal of the profiteers have been exposed. A combination of a few corrupt oil thieves, privileged individuals, political appointees and elected ones who as major sponsors and backers of government, are milking the economy of this country dry. For instance, they give the Government (the officials of whom are in collaboration with the cabal) false invoices, which inflate the amount of crude they actually lifted by up to 1000% or more; e.g. they lift 30,000 barrels but claim 3 million barrels. And the Government pays, knowing this to be false. The cabal shares the illegal profit with the government and NNPC officials.

Then the cabal will also claim inflated logistic costs, e.g. transportation, labour, etc, for distribution across the country. The Government knowingly and complicity pays again. That is why we have such high subsidy on fuel as claimed.

Then, what about the Nigerian Maritime Administration and Safety Agency, NIMASA, assertion that some fraudulent but highly placed Nigerians defraud the Federal Government of several millions of dollars through unauthorised midstream discharge of tanker vessels loaded with refined petroleum products under the fuel subsidy regime?

Midstream discharge, in shipping parlance, is a legitimate practice whereby smaller ships are taken to the high seas to discharge the contents of some big ships which are too large for the water channel and risk running aground. The practice has over the years been subjected to gross abuse as some Nigerian officials, with the active connivance of their foreign counterparts, take delivery from bigger vessels while still on the high seas with the necessary documentation and payments. According to NIMASA, currently the agency has arrested and detained over 20 ships for indulging in such illegal activities, adding that the agency has been under pressure from highly-placed Nigerians to release them, describing the level of economic sabotage as “staggering”.

Since their exposure, our government has not even said anything to deny or admit it, because the government cannot muster enough political and moral will to arrest and prosecute them.

From a research conducted by Strategic Union of Professionals for the Advancement of Nigeria (SUPA) 2010, it was concluded that government makes a profit of 33.50 N/Litre on PMS (Petrol) at the current price of 65 N/Litre. This translates to a very high 106% profit per litre. In addition the government benefits from royalties, taxes and fees which were not factored in this simplified analysis. When factored, the actual crude cost per barrel to government is significantly less and its profit correspondingly higher.

Therefore, posited SUPA, the claim of subsidies on petroleum products is incorrect. So that’s another Government lie.
When a government lacks sincerity, honesty of purpose and trust, then such government is gradually inviting anarchy and chaos. By selling us a dummy, (that the start date for implementation of fuel subsidy removal would not begin until 1st April 2012, and then going back on their promise and implementing the same on 1st January 2012), to the electorate, the Presidency has lost integrity and trust of the Nigerian people irrevocably. Government should have kept its word till April by which time better explanation would have been given before implementation takes effect.

The Presidency and the Federal Government, only last week, stated that they are holding consultations with stakeholders, including organised labour and to get feedback from the people on the proposed fuel subsidy removal. In any democratic setting, the people should have a say in any decision that affects them on any governmental policies. This is the meaning ascribed to section 14 (2c) 1999 constitution which enjoins citizens to participate in the government of their country. Where does our sovereignty as Nigerians lie in all this? Why would any government disregard the aspirations of its people and acts in contravention of the constitution of the land? And also lie to them?

But let’s look at it this way. We know who benefits from the subsidy the Government (and it’s not only Jonathan’s government) pays. Our governments, past and present have been telling us for decades that we the masses benefit from the subsidy; now we know we don’t. So if the subsidy is removed, that should mean the cabal who had been benefitting from the subsidy for decades, will no longer be able to profit and rip Nigeria off, isn’t it? That means the corrupt government officials who collaborate with the oil subsidy cabal to cheat Nigeria will no longer be able to anymore, isn’t it? That should be the ideal and logical conclusion.

According to an article, “The Truth about Oil Subsidy” by Mrs Ganiyat Gani-Fawehnimi (wife of late Chief Gani Fawehinmi), “the truth is that t

here was never an oil subsidy; there has never been an oil subsidy and today there is no oil subsidy in the pricing of petrol per liter in Nigeria. The causes of our present oil chaos are not the issue of oil subsidy but:

-High level of corruption in all strata of governance in all parts of Nigeria.
-Massive and unchecked stealing by our leaders, their cohorts and cronies in public and private sectors of the Nigerian economy over the decades.
-Open and deceptive mismanagement of our resources including public funds.
-Mindless and mind-boggling lavish projects specifically designed as conduit pipes to siphon the people’s common wealth into private pockets at the expense of the needs and cares of the suffering Nigerian masses.
-Unceasing and measured astronomical devaluation of the Nigerian currency, a result of gross mis-governance of the country in all facets of human activities”.

The Nigerian people have been ambushed by a government they expressively gave a popular mandate to represent them in April 2011. It is not only a betrayal by the Government against its people, but also unconstitutional because the Presidency proceeded to implement the removal of the oil subsidy without resort to the National Assembly who have neither given it any legislative support nor was it stated in the 2012 national budget.

Allow me to quote former Head of State, Ibrahim Babangida “The sole purpose of any government is for the good of the people and not to create hardship for its people. The National Assembly should have been made to be part of the decision-making process since the 2012 budget is yet to be discussed and passed by the Legislature. Every government should ordinarily take the interest of the people at heart so that the reason for its existence would be justified”.

So what do we do under the circumstance? There are now riots and protests all over the country as of the 3rd of January 2012, but are these enough? Or, more importantly, will these sporadic and largely uncoordinated and ill-organised civil protests force the government of Goodluck Jonathan to rescind its decision?

Hear Rufus K Oteniya of Transparency For Nigeria “If this is only about removing subsidy, it’s not worth it and count me out. If Jonathan reverses the price, it’ll not stop looting and corruption; insecurity and over bloated cost of running government. Nigerians must use this opportunity to uproot and crash this faulty democracy and install a system that will cause us to determine the genuine path the nation must tread through Sovereign National Conference (SNC). Jonathan is obviously a confused man who is also looking for a way out of Aso Rock. He knows that we all know that he does not know anything about governing. Nigerians must take this chance! Push for a complete overhaul of the system; push for an Interim government to call for a SNC (Sovereign National Conference). This is the revolution I will support!!!

And Wale Adedayo “Protesting just about fuel price hike will NEVER solve our problems. We have a set of people who should NEVER have been in office in the first place. Join the strike. Join the protest. But the clarion call should be the removal of a system and a set off rogues who have been keeping us under perpetual slavery since Nigeria’s independence in 1960. They MUST go!!!

I like this concluding part in an article “Nothing Like Oil Subsidy” written by Dr. Izielen Agbon, from Dallas, Texas “The government should explain at what price the swapped crude oil was sold and where the money accruing from these sales have been kept. We have done this simple economic analysis of the Nigerian petroleum products market to show that there is no petrol subsidy what so ever. In the end, this debate on petrol subsidy and the attempt of the government to transfer wealth from the Nigerian masses to a petrol cabal will be decided in the streets. Nigerian workers, farmers, students, market women, youths, unemployed, NGO and civil society as a whole should prepare for a long harmattan season of protracted struggle. They should not just embark on 3 days strike/protests after which the government reduces the hiked petroleum prices by a few Naira. They must embark upon in a sustainable struggle that will lead to fundamental changes. Let us remove our entire political subsidy from the government and end this petroleum products subsidy debate once and for all. It is time to bring the Arab Spring south.”

In conclusion, there are questions to be asked (with reference to my friend and brother, CV Akuta):

The removal of “Oil Subsidy” is actually a way of punishing Nigerians for the failure of an inept government to effectively fight corruption, not only in the oil industry, but in the country as a whole.

-What guarantees do this government have that the savings to be realized from the oil subsidy removal will be used prudently and for the benefit of all Nigerians and not just a few corrupt and greedy individuals?
-Government has again proven not to be trusted with President Jonathan announcing to the world that subsidy will be not be removed until 1st April 2012, and only after consultation with organised labour and the people of Nigeria, only for him to remove it on 1st January 2012.
-What happened to the Petroleum Trust Fund after ex-President Obasanjo took over?
-What will happen to the Christopher Kolade Committee after his tenure?
-Why set up Belgore Committee to dialogue with organised labour when the subsidy had already been removed?
-How will the President cushion the effects of the hardships which will be caused by the removal of the oil subsidy?
-What will happen to the poor and unemployed Nigerians with this onslaught by an insensitive government?
Nigerians should resist the oil subsidy removal, till this policy is reversed.

God Bless Nigeria.

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1 comment

Pius Bayode January 4, 2012 - 9:33 am

Excellent report. Well presented


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