There is no gain saying the fact that Nigeria is Africa‘s largest oil producer, but still imports refined petrol.
The country, is reported to be producing about 2.4 million barrels of crude oil daily which is exported to be refined abroad; however due to years of corruption-fueled neglect the domestic refineries are inoperative. As a consequence, Nigeria imports 70% of its gasoline (about 250,000bpd of petroleum products)into the country for sale to its citizens.
The price of petrol has increased from 65 naira per litre to 145 naira in filling stationsand from 100 naira to at least 200 naira on the black market, from which many Nigerians buy their fuel.
With the majority of Nigerians living on less than $2 per day, cheap petrol is viewed by many Nigerians as the only tangible benefit they receive from the state, hence the widespread disapproval. In addition, the economy is heavily reliant on crude oil (amongst other reasons, due to absence of essential infrastructure and services such as constant electricity).
A consequence of this is that other seemingly unrelated items are tied to the price of fuel as has occurred from previous price hikes. Due to the absence of stable electricity, gasoline generators are a common energy alternative for small businesses and residences.
HOW MANY LITRES PER DAY DO WE CONSUME?
In January 2019, the President of the Senate, Bukola Saraki, alleged a massive fraud in the nation’s oil sector under the President Muhammadu Buhari’s administration.
“One of the areas we labeled the Goodluck Jonathan government as a corrupt one is on the issue of fuel subsidy. The assumption then was that the Federal Government was paying subsidy on the 30 million litres of fuel being consumed daily by Nigerians.
“All statistics have shown, even now that it is not possible for Nigerians to consume that much daily.
“A government that is claiming to be fighting corruption is now telling us that we are consuming 50 million litres of fuel per day. It is not possible.
“The National Assembly has investigated the Nigerian National Petroleum Corporation’s claims but our efforts have been frustrated because agencies of government under the current government have been emboldened to disregard the National Assembly.
“We have lost a lot of money because oil is our major source of revenue through the NNPC. If we are paying subsidy based on the 50 million litre consumption then it is a big fraud! It is corruption.”
How did our Fuel consumption rise so astronomically from an average of 30-35 million under the last government to 80 million litres per day in some months and average 54 million litres per day in other months?
The Petroleum Industry Governance Bill (PIGB) that would have revolutionized, liberalized, eliminated most of the fraud and subsidy, ensured transparency, inspired confidence and attracted massive economic investments to the oil sector was rejected by the government for the simple reason that it reduced the powers of the president to interfere with the oil sector.
It is a tragedy of monumental proportions that a government that trumpets fighting corruption as a central plank policy of governance has tragically shown remarkable unwillingness to attempt a serious inquest into the fraud in the NNPC subsidy regime and the massive round tripping in the consumption volume.
REMOVE FUEL SUBSIDY AGAIN?
Petroleum subsidy was removed on Sunday, 1 January 2012 as then announced by the Executive Secretary of the Petroleum Product Pricing Regulatory Agency, PPPRA Reginald Stanley.
The government then, assuaged our fears by stating that they were not oblivious of the pains inflicted by Nigerians as a result of the new policy.
In order to ameliorate those pains, he said the government had commenced a ‘massive mass transit scheme’ aimed at cushioning the effects of the subsidy removal on transportation. 1600 diesel-powered mass transit vehicles, he claimed, would be distributed.
Now the World Bank just released a damning report indicting the managers of our economy. The Bank’s report has given further credence to the suspicious shady subsidy claims by the federal government.
The World Bank report on the NNPC states: “The NNPC financial reports indicate that about US$2billion (equivalent to 0.6 per cent GDP) were deducted from the gross oil revenue prior to the transfer to the federation account for the unbudgeted fuel subsidy (‘cost under-recovery’).
“The calculations for the fuel subsidy are based on heavily inflated fuel consumption estimates, with the fiscally severely constrained Nigerian government effectively subsidizing neighboring countries’ petrol consumption as some of the fuel is informally re-exported through the porous borders.”
Where then is transparency of governance if we cannot put a finger to what we actually produce and consume each day!
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