The Nigerian government has so far been able to fool most Nigerians into accepting that there is a subsidy on premium motor spirits, commonly called petroleum. Nigerians, who have since independence subsidized corruption leadership, are being paid back in an offensive and reprehensible way by a president they least expected to hurt them. The nation woke up in awe and shock by the sudden announcement of gasoline price increases on New Year day. How they will take the hard blow from their very gentle president is yet difficult to predict but if what the media have been reporting is credible, Nigeria will be flattened by angry protests when the citizens recover from the heavy punch. Sadly, the same media organizations are the medium used to deliver and serve ordinary Nigerians, who will surely suffer if the new prices stand, on the dinner plate of Aso Rock.
The media have never seriously challenged the government’s assertion of a subsidy with facts and have almost acted entirely in agreement with the Goodluck Jonathan administration. Going by the accounts of the newspapers online on January 1, 2012, there is an agreement that there was indeed a subsidy on end-user petroleum products. The Guardian admitted in its lead story that “…subsidy on petrol had finally been removed.” The Nation capitulated in a flashy headline, “Subsidy removal: Tougher times ahead in 2012.” The Vanguard was as lame, when it wrote: “Fuel subsidy removal: Pro-Labour groups call for mass protest.” Daily Sun would not be outdone in laziness and ignorance, as it plastered a flash headline titled: “Fuel Subsidy Gone” on its home page. Nigerian Tribune, joining the bandwagon, announced: “FG removes subsidy on petrol.” PM News went further, reporting that “Thus, Nigerian petrol consumers are expected to start buying petrol at this price with the announcement of the end of subsidy regime today.”
Thomas Jefferson, founding father and former United States president wrote in 1816 that when the press is free and people are able to read, all is safe. How myopic he was in his assumption, you would think. The press is free in Nigeria and most of the people are able to read, yet all is not safe. Thomas Jefferson deserves a pardon since the Nigerian factor could never have been imagined in his days.
It is so easy to get in the unnecessary and unfruitful discussion of whether or not the so-called subsidy should have been removed at this time. However, launching that discourse at all is based on a false premise. We need to retrace our steps and ask simple questions to rationally challenge any statement that claims there was a subsidy on Nigeria’s gasoline as sold through the media. The simple fact is that there was never a subsidy and the Federal Government, through the overwhelming inducement of the media, have been able to force the nation into admitting that there was assistance on petroleum products. The government information machinery has succeeded in making the word subsidy stick through preponderant usage. We should attempt to detach that word from our national vocabulary until we get the facts straight.
It is not too difficult to understand the issues involved in the politics of oil marketing if we use common sense. Without understanding the basic arguments of the price increase, we will be awarding free money to the already gravely corrupt government officials in Nigeria. These are the same officials who are only so smart to buy the most expensive cars anywhere with stolen money, for use on the worst roads they can be driven on. We cannot possibly want to award more money to the greedy loafers who have run the nation aground through policies that put expensive cars on bad roads.
I will use a simple analogy to illustrate the non-existence of oil subsidy. Nigeria is this groundnut farmer in Kano who sells his entire groundnut when it is clear to him he will soon need groundnut oil for cooking. This seller grows each nut for one naira and sells for five naira, but buys back the cooking oil for 8 naira. He has many other options. First, he could convert the nut to oil by himself. However, through mismanagement and corruption, he has damaged the tools he requires for self-production. Secondly, he could give the nuts away at no cost and pay the external producer just the production cost of conversion to cooking oil. Thirdly, he could bring others in to his farm to convert the oil for him for a profit.
Our groundnut seller has, however, ignored all these options, deciding greedily to sell his nuts for the market price, knowing fully well that he will also be forced to buy back the finished product at the going market rate. When he buys the end product, he fails to tell members of his household about the profit he already pocketed through sale at the market rate. Instead, he tells his wife and children the cooking oil is priced at 8 naira, without declaring the five naira he already pocketed. Neither would he tell them about the various fees which he charges through his workers to buy back the oil; and how the selling and buying process exponentially increases the cost of the finished product by the time it gets to his kitchen.
Nigeria is buying oil back at the same rate that countries like Sierra Leone, India or Jamaica would, but it does not buy with an empty hand. The cost of Nigeria’s refined oil is not being computed with a deduction of the profit on the crude oil. That is where the math is all wrong. That is where the government has not been honest with its own people by presenting fuzzy math. That is where the media should have started the discussion. I have read a few complex explanations by subject matter experts- it is now time to simplify this debate for the public so that our citizens can embark on the “oil subsidy” protests with a clear understanding of the issues.
If there ever was a subsidy in Nigeria, it is the subsidy of corruption and mismanagement of the oil sector by ordinary Nigerians. Nigerians have subsidized for far too long incompetent leadership, visionless administration and all manners of opportunists who lurk around the high places. Important Nigerians live off the oil wealth, before, during or after their lives in public service. Ibrahim Babangida, Abubakar Abdulsalam, Theophilus Danjuma, Olusegun Obasanjo, among others, as well as their families and associates have lived and continued to feed off the petroleum sector like saprophytic fungi. Yet, none of them in or out of power have worked hard enough to make Nigeria free from the reliance on foreign refining of oil products. Instead, they are either actively involved in squeezing more money out of the immoral downstream oil marketing business, using their cohorts – who are on the Forbes list of the wealthiest – to whom they gave the incalculable opportunity, to draw blood from the veins of hard-working ordinary Nigerians. The wealthiest, which benefit from the cooked subsidy, are the cream of the society.
The so-called subsidy that the government is touting is the sum total of its own crude oil sale, cost of export, cost of import, sales tax to itself, custom charges, demurrage, production and distribution costs, plant and maintenance costs and other overhead charges calculated by the Nigerian National Petroleum Corporation, whose officials, we all know, are as corrupt as they come. The Yorubas call them the “jegudujera.”
Among nations endowed with oil resources, Nigeria sells gasoline at one of the most expensive rates to her citizens, with the exception of developed and emerging nations where oil pricing is derived from complex economic parameters. Countries like Iran, Iraq, Saudi Arabia, Kuwait, Libya, Venezuela, Indonesia, United Arab Emirates and Turkmenistan sell gasoline in their countries at rates that are lower than the one the Jonathan administration is bickering about. Yet, the economic conditions of the citizens of these other countries are far better than that of Nigerians.
In countries such as Norway, United Kingdom, Canada and the United States, the oil pricing structure that NNPC strives to post on the billboard is nothing compared to what obtains in Nigeria. In the United States for instance, oil pricing differs from state to state and it is used for many economic objectives, ranging from financing road maintenance or improving education to redistributing wealth. This is why in America, New York’s gas price is much higher than New Jersey’s, although both states are close to each other in every sense. In New York, the average cost for regular fuel is $4. Of that amount, 33 cents goes to the New York State Government, 15 cents goes to the county government and 18 cents goes to the US Federal Government. That comes to 66 cents in taxes. The actual cost of oil is much lower but the total cost is meant for other purposes that are approved through legislation. The cost of crude oil and refining is factored and known by the citizens, unlike in Nigeria where this figure is lost in translation.
If the current increase, camouflaged as subsidy, is allowed to stand, automobile gasoline will be cheaper in much of the United States than Nigeria. At the reported rate of 141 naira per liter, oil per gallon in Nigeria will total 564 naira, which at the currency conversion rate of one dollar to 160 naira translates to $3.25 dollars per gallon. Well, I am able to buy gas at $2.97 per gallon in northern New Jersey, USA, on New Year day, 2012. The Nigerian government is selling gasoline at a rate that is more expensive than what an American buyer pays when the product is also imported. The Nigerian government is lying in order to rob its own citizens.
At the end of the day, the Jonathan administration will gain some respect if it repairs all the refineries, builds even new and bigger ones, then invites honest discussions about what it costs to refine oil within Nigeria. The cost of refining crude oil without any crude oil sales costs is the true value of premium motor spirits in Nigeria. There is no reason why Nigeria should be buying refined gasoline from overseas. It cannot afford to, it cannot continue to. If it does, that is not a true cost and should continue to be paid as the cost of mismanagement and corruption by the government. In the end, you pay a price for your avoidable problems.
There is too much lying surrounding the question about subsidy of oil products in Nigeria. Nigerians should have been asking questions – but how could they when the media has been reporting only “President Goodluck Jonathan has said?” There have been few investigative and elucidative articles and stories and the government has almost run away with a scam!
We must get answers to important question about the oil price increase quickly and each media organization must take a position in support or against of charging more for gasoline. Any worker who dies as a result of the ensuing protests need to be convinced he is dying for an issue he clearly understands. Who is better to explain the issues at stake than the mass media in Nigeria?
As the nation gears up for protests against this flagrant and wicked oil price increase, I would hope that this becomes our own opportunity for a revolution – a repudiation of bad governance, mismanagement, corruption and all the factors that gave rise to a cold and impassioned gift of continued poverty to Nigerians. This issue of subsidy is comparable to the June 12 election cover-up, the Odi killings, the lying that surrounded Yar’Adua’s presidential illness or the faces behind Boko Haram. We can stop subsidizing bad governance if we use the subsidy scam as a symbolic issue to clean up the nation and create a new society that works.
Odediran, former journalist in Nigeria and the founder of againstbabangida.com, writes from New Jersey.