Human management

Fuel Subsidy Removal and Oil Management Fail in Nigeria – The Sun Nigeria

Oil is a blessing, be it palm or oil. Even spiritually, the oil represents the presence and power of the Spirit of God throughout the Bible. The petroleum, petroleum and natural gas industry does more than meet the energy needs of society. They create jobs, stimulate local businesses, stimulate research and development and promote education and training. In any case, a sector that contributes around 80 percent of federal government revenues and 90 percent of Nigeria’s export earnings cannot be described other than as being a blessing to the country. However, every time cursed, incompetent and selfish people take over a country, the people cry. So there is nothing inherently wrong or cursed with our oil, the only problem with oil in Nigeria is the mismanagement of it.

I was fortunate enough to be educated by the first Professor of Management in Africa at the University of Nigeria, Professor Agwu Akpala, and he loved my Masters in Management so much, that in addition to awarding me a certificate of academic excellence for being the best student in the Faculty of Business Administration that year by the Faculty, he encouraged me to come back to the University to become a lecturer as soon as I finished my baccalaureate . I ran away to movies that didn’t exist at the time, but with the prior knowledge of management we were able to establish this industry, Nollywood, which became the toast of the world, starting with the movie Living in Bondage, which I played as Andy Okeke, the lead actor. Effective management can positively change any sector of the economy for the betterment of people’s lives.

Management, according to Professor Akpala, is “the process of combining and using, or allocating the inputs of an organization (people, materials and money) by planning, organizing, directing and controlling with the aim of producing outputs (goods and services or whatever the objects are) desired by clients so that organizational objectives are achieved ”. Oil was first discovered in Nigeria in commercial quantities around 1958, before independence and before most countries discovered theirs. The mere fact that after 64 years of the discovery of petroleum in Nigeria, the company in charge of petroleum management, the Nigerian National Petroleum Corporation (NNPC), cannot produce the goods and services (mainly refined petroleum) desired by consumers or customers or even keeping refineries available, tells you the extent of mismanagement that is happening in the petroleum industry. Meanwhile, the Dangote oil refineries, which started around 3 years ago, will soon start operations. The gap is too large between inefficient management in the corrupt public sector and the efficient private sector. Don’t even think that this rot in the public sector is unique to a section, tribe, state, or geopolitical area. It’s systemic.

As terrible as the government is, in the management of businesses, in Nigeria the law has entrusted the management of oil and gas exclusively to the federal government. Even state or local governments are not eligible to participate in oil and gas sector operations. There was a time under military rule when oil falsification in Nigeria carried the death penalty. Specifically, Article 44 (3) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) states that “… or in, under or on the territorial waters and the exclusive economic zone of Nigeria shall be in the government of the Federation and is managed in the manner which may be prescribed by the National Assembly ”.

It’s no surprise that after 64 years of oil discovery in Nigeria, instead of the federal government making trillions of naira exporting the refined oil it produces, it spends trillions of naira, allegedly, by subsidizing the petroleum products that it imports. The truth is, the whole subsidy scheme is a fraud as President Buhari pointed out before he came to power. The same grant union is the reason our refineries are designed to be permanently dysfunctional. The same union inflates their purchase bills and blackmails the government to pay them by refusing to supply their product if the government does not pay the inflated bill. It is the same union which ensures that any serious minister in repairing our refineries is ignominiously removed from his post. I remember the days of Ibe Kachikwu who vowed to repair our refineries before 2019 as the general manager of the NNPC or to resign. He was denied the opportunity to see the president for six months as Minister of State for Petroleum. Of course, he was not reappointed. Our refineries are not functioning to this day. The reason is the corruption and the inadequacy of the government as a manager of companies. Nigeria is the only country in the world where people are frightened when international oil prices rise, rather than cheering, as high international oil prices mean high local prices as every liter of oil consumed in Nigeria is imported.

It is to the credit of this current federal government, under President Buhari and the National Assembly under Ahmed Lawan, that the Oil Industry Law was enacted. The sole purpose of the law is to ensure that NNPC Limited conducts its business on a commercial basis profitably without resorting to public funds and their memorandum and articles of association will set out these restrictions. Also grant licenses to persons capable of being part of the management of the petroleum industry. This should indeed usher in the liberalization and commercialization of the oil industry, which the country desperately needs. It is roughly called deregulation.

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The success or failure of this system will depend on the transparency of the licensing regime. We had incredible success in our telecommunications when competent people and companies were licensed and this caused the purchase price of a telephone line to drop by hundreds of thousands of naira, which was the exclusive privilege. of NITEL, and when a sitting communications minister proclaimed that the phone was not made for the poor, free of charge, within two years of the license being granted. Call prices have dropped from N 50.00 per second when licenses were issued to around 8,000 per second today on some networks. There is no reason that the price of petroleum products would not have been one of the cheapest in Nigeria today without the corruption in this sector.

It is with indignation that the entire Nigerian people have greeted the news of a possible increase in the price of fuel from N 165.00 currently to around N 340.00 or N 420.00 in the first quarter of 2022. The President Nigerian Labor Congress Ayuba Wabba was clear on this when he joked: “It is difficult to convince Nigerian workers why our dear country is the only country among OPEC member countries that cannot not produce its own refined petroleum products and thus adopts the neoliberal model of import production of refined petroleum products ”. Anyone who has spread the message of price increases is very oblivious to the current difficult economic atmosphere. In the words of Muda Yusuf, former CEO of LCCI, “there is undoubtedly a strong economic and business case for removing fuel subsidies. But the social and political contexts are just as critical ”.

What Nigeria aspires to is deregulation, not higher prices. If deregulation is carried out perfectly, although there may still be a slight increase in prices initially, prices will soon drop as more experts flood the oil industry with better technological means of refining oil. Can you imagine how low the price of fuel will be in Nigeria if the cost of shipping our crude overseas and the cost of shipping refined oil to Nigeria are removed because all the oil needed for the? domestic use will be refined at the national level? This is why David Adonri, authorized trader, argued that “the removal of fuel subsidies is an economic imperative, but the oil industry and the electric power industry must first be fully deregulated”. Deregulation means that the government will no longer monopolize the management of the oil sector. This will mean that our refineries should be operating at full capacity. It is in this regard that the recent decision of the current Minister of Petroleum to invest $ 1.5 billion in foreign borrowed money for the refurbishment of our refineries is an avoidable waste of resources. There can be no assurance that money will not be stolen or that refineries will be effectively run by the government after refurbishment. The best option is to sell the refineries to competent private hands which will immediately reverse the fortunes of these companies. In addition, the government’s alleged interest in investing more than $ 3.5 billion in oil refineries in Dangote should be immediately stopped. Petroleum products are nothing special. It is not even a security product, it is simply an essential commodity that is necessary for the proper functioning of the country. Food is more of a staple than oil. The government should therefore reduce its sentimental attachment to oil and deregulate it completely. It must allow Dangote Oil and all other private refineries to operate freely, independently and economically. It should not set a precedent that would encourage future governments to interfere in the affairs of a private economic initiative. Dangote should also resist such an unholy alliance and run its affairs in accordance with prevailing economic realities.

Telecommunications are a more security-prone commodity, but the government does not interfere with the services of private telecommunications providers. The oil should be treated in the same way. We therefore reject such insensitive promulgation of high oil prices on the people and instead advocate for transparent, swift and total deregulation of the oil industry which, in turn, will ultimately lower oil prices after the slight initial price increase. The government should refrain from mentioning premeditated high prices because that is testimony that it is not deregulating. In a fully deregulated economy, it is market forces that determine the price, not the government. In America, the petroleum industry is completely deregulated and it enjoys the benefits of petroleum to this day. The same can happen in Nigeria with good management of the oil industry.