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Wednesday, November 18, 2009

Deregulation: Another Gimmick?

By Emmanuel Nathan Oguche

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After the torrential wind and the unprecedented Tsunami that gulped many Nigerian banks and their Chief Executive Officers, one of the most controversial and the hottest news today is the noise of the Federal Government’s deregulation policy of the down stream oil sector. Many will definitely add Bode George’s saga to the list. Well, C(T)hief (Chief or Thief) George’s is not alone. His case can just be described as one out of many, period. May be one day, Federal Government would be forced to pay ‘subsidies’ on the monies that are being looted and swindled by our so-called leaders on daily basis. We’ll then start talking about Deregulation of corruption. But until then, let’s talk about deregulation of the down stream oil sector.





For the sake of those who have a mucky and narrow perspective of what deregulation is all about, it simply means the reduction or removal of government power in a particular industry, usually enacted to create more competition within the industry. Deregulation is not one-point agendum like price hike as our leaders want to make us believe; it’s a result-oriented vision that requires concerted efforts; series of activities that will give birth to a reasonable and healthy competition among the various operators of the oil sector. This definition doesn’t however mean that a deregulated industry is not without control. Yes there are controls but the forces of demand and supply which economists term as ‘price mechanism’ should be the major determinant factor.

In Nigeria it is different. For instance, whenever ‘deregulation’ is mentioned the first thing that comes to the mind of an average Nigerian is the down stream oil sector. Do you blame them? The answer is definitely no. Many people believe or are made to believe that the oil sector is the cradle of Nigerian deregulation. But this general belief is erroneous and unfounded as every sector at one time or the other has experienced deregulation. So what is the noise about the deregulation of the oil sector all about? Is the telecommunication sector not deregulated? Why is the Government shouting? Why are Nigerians crying? Why are Labour groups screaming?

It is obvious that with the crash in global oil prices, the government is under a severe pressure to remove subsidy; the subsidy which guzzled as high as 600 billion naira in 2008. It is a national shame and disgrace that Nigeria, the world’s seventh producer of oil is also the major importer of petroleum products. If it is cheaper to import rather than to refine in our local refineries, is it not more reasonable too for government to bold enough by paying subsidy for its own nonchalance and incompetence? The three refineries in Kaduna, Port Hacourt and Warri are in a state of comatose and the government is not yet ready to sell them. How can government own refineries and at the same time be talking about deregulation? What prevents the government from privatizing those refineries since it has failed to manage them in full capacity? The government doesn’t have any reason to bark since it has failed in its responsibility.

Why are Nigerians crying? Nigerians have every reason to cry especially in an environment like ours where deregulation of the oil sector is tantamount to unapologetic and arrogant price hike. Deregulation is beyond fuel price hike. It’s a process, not an act. Fuel price hike which masquerades as deregulation has never solved the problem of fuel scarcity, inefficiency of government refineries, corruptions and gross ineptness of the Nigerian National Petroleum Corporation (NNPC) and other stakeholders operating in the oil sector. Moreover, when there’s a fuel price hike, only the poor masses that depend solely on gasoline, petroleum and kerosene for their daily activities are the ones whose fingers are being soiled for the plates of porridge eaten by their leaders. No wonder, the audacious Governor of Central Bank, Sanusi Lamido Sanusi has raised an alarm on the danger of fuel price hike and has therefore joined the many antagonists of deregulation (price hike) due its untold hardships and teething inflationary consequences on the masses.




The labour groups are on the side of Nigerian masses. They believe that Nigeria is not due for another fuel price hike, especially now that we don’t have any alternative to energy. The President, Trade Union Congress was quoted to have said: “On a normal export day, we are supposed to export about two million barrels (of crude oil). And if there is no problem in the Niger Delta, we are looking at, may be, in another one or two, three years, at how to get up to three years, at how to get up to three million per day. So, how can you explain the importation of petrol and kerosene that has been going on over ten years?” The government must answer this question before it can make any plan for deregulation.



Sincere and a well planned deregulation is what Nigerians want not an unscrupulous and inhuman fuel price hike. Deregulation is not equated and shouldn’t be equated with fuel price hike. The problem of the Nigerian down stream oil sector is not a mathematical one that requires a single solution. The plan by the government to foist another round of fuel price hike in the name of deregulation is like giving panadol tablets to a malaria patient. The panadol will definitely relief the pain but be sure that the malaria parasite will remain. Federal Government should be a good doctor by prescribing the right medications to the ‘malaria’ that has kept the down stream oil sector down for decades, for price hike in the name of deregulation is yet another gimmick from the government.

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