PONDERING THE OIL INDUSTRY PROBES

Nothing can be cleaner. Has any Nigerian ever brought a new aluminum saucepan from a market? That is how clean those who testified at the hearing conducted by the House of Representatives Ad-hoc Committee on fuel subsidy regime are. Trust them not to be at fault. The government agencies involved, that is. In fact, they claimed not to have made a single error in calculating the litres of petrol Nigerians guzzle in a day throughout 2011. Each agency was perfect, all of them as efficient as a computer. As for their Managing Directors and staff of the supervising ministry, there are no better saints. Yet Nigeria bleeds.

That shocking revelations have been coming out of the latest hearing is no news. None of that came into the open because concerned agencies admitted so much. Discerning listeners could only glean from papers that the Representatives scanned through, the discrepancies they noticed, as well as the questions they asked to which their respondents gave no satisfactory answers.  They had all sounded concise, unruffled  with their Queen’s English when they made their presentations. But when lawmakers diligently scrutinized papers and asked the right questions, every Nigerian could see their discomfiture. Even when Chief Executives were made to admit “irregularities” and  gross “manipulations in the sector,” no one pointed accusing fingers at anyone else. Yet they had all sworn to say the truth and nothing but the truth. “Cabal” may not just be those who take subsidy fund without supplying fuel, they may as well be the government officials who point accusing fingers at others in this conspiracy of silence.

Every agency or organization connected with the management and supply of fuel to Nigerians was called to answer questions that time. Ministry of Petroleum Resources; Nigerian National Petroleum Corporation, NNPC; Pipelines and Products Marketing Company Limited, PPMC, Petroleum Products Pricing Regulatory Agency, PPPRA; the independent Nigerian Extractive Industry Transparency International NEITI, and oil marketers.
Of all, only the two that were not government agencies owned up to anything -  NEITI and a face from among oil marketers. Well, it was not as if they stole anything, and admitted that they did. Both only said the whole truth, and nothing but the truth.  NEITI is the nation’s branch of Extractive Industry Transparent International EITI, and its Chairman here says part of its aim is to ensure that revenue  from whatever is mined in any country, including crude oil, is used for national development in the nation concerned. Its objective in Nigeria is to ensure that the government uses such resources prudently and that it is used in a transparent and accountable manner.

But what did NEITI see of the activities in the nations upstream and downstream sectors so far? the NEITI boss in Nigeria was asked. Findings of the body shows that recordings of the concerned government agencies are paper-based, contrary to best global practice, and as such are subject to errors. He most probably meant manipulations, because the petroleum minister had said there is no doubt that there have been manipulations of numbers and figures in the administration of fuel subsidy. As for other findings, measurements used at the point fuel arrives the country are not according to global best practices, and both management and management strategies in most of the agencies  involved in the oil industry, as well as their data are suspect. The body said it called the attention of the agencies to all of these, that they did promise to make amends, but till date, nothing had been done.

What did the face of oil marketers at the hearing have to say in the entire matter? Importers must have petrol dispensing stations in equal numbers in each of the states of the federation, he had said. They should also have jetty where they could offload at the port.  Those are two of the conditions before any fuel importer can be prequalified, he added. But some non major oil marketers who do not fulfill these two conditions have been prequalified. In that case, incidence of fuel diversion and smuggling would continue if this is not stopped because without dispensing stations, it is difficult to monitor whether  what left port got to Nigerian consumers.  Asked further if he could mention the name of those prequalified who are no actually qualified, the face of oil marketers had smiled indulgently, and asked to be excused. He would however do so in writing.

Incidentally, various heads who had watched as these anomalies went on over the years are now calling for probes. Lawmakers, both in the Senate and House of Representatives, whose committees have oversight functions over these agencies have instituted probes. The Petroleum Minister has ordered hers, and lately the Federal Executive Council is paying NEITI some three hundred million naira to conduct an investigation. As it is, the Ad-hoc Committee of the House of Representatives stated that a clear twenty four million litres of fuel per day was subsidized over and above the thirty seven million litres that officials say Nigerians guzzle each day. That means the government paid billions of naira per year in subsidy for what Nigerians did not consume, but were diverted to other countries. Concerns have been expressed over the possibility of bringing to book those named in the fuel subsidy fraud. But one thing is clear; probes are good, but they will not solve the immediate problem. And what is the immediate problem? The need to ensure the nation does not continue to pay subsidies that shot up its recurrent expenditure over the more beneficial capital expenditure. Solution? Deregulate and bring the private sector into the local oil refining business as fast as possible.

As it is, NNPC boss is claiming that without turning around the nation’s three refineries, no investor would buy them, meaning that government would have to expend time and resources to turn them around. 
This claim is not the total truth. These refineries were sold to Nigerian private investors in 2007 before the Umar Yardua-Goodluck Jonathan administration took them back, and had the buyers’ money refunded. In any case, taking time to turn around refineries is contrary to government plan to deregulate. It is a waste of time. The deregulation policy should be the focus now. It is what would make it possible to follow through the phased process that would eventually lead to the total removal of fuel subsidy. In that case, the essence of the ongoing probes should basically be to take back what some stole from Nigerians, and that should be separated from the process that should lead to deregulation. Meanwhile, all concerned should focus on passing the Petroleum Industry Bill so that the deregulation could flow there from Reason? This bill should have been implemented because it is the fountain of deregulation, instead of the latest failed attempt by the government to make Nigerians bear the brunt of its inefficiency in the in the oil industry.

*** Tunji Ajibade is a Communications Consultant. tunjioa@yahoo.com.