These are not the best of times for the Nigerian economy, the average Nigerian citizen and members of the business class in Nigeria. The Nigeria economy bleeds and it is virtually on the brinks of collapse. Available resources are not put to optimal use and the debt burden is becoming excruciating, compared to our available revenue, while the nation is diverting resources to fund the greed of a few people.
Corruption walks on four legs, especially in the petroleum sector, in an administration that has vowed to fight corruption. And this is a sector under the immediate control of the President and Commander-in-Chief of the Armed forces.
Let us start with the bleeding coming straight from the nation’s treasure fixation, which is petroleum and its management. The World Bank reports that Nigeria spent N731billion in subsiding petroleum products in 2018. This is coming at a time the releases for the 2018 capital budget implementation fell way below the subsidy figure. The implication of this is clearly a case of misplacement of priorities and governmental inability to think, plan and spend available resources in a sustainable manner. It is also a clear example of politics trumping governance and simple sense economics and spending without an evidence-based scale of preference.
Before the current administration came on stream, Nigerians were told that there was, indeed, no need for subsidy on petroleum products and the claim of subsidy by the previous administration was all about corruption. Fast forward to the present time when subsidy was renamed under recovery, but it still claims billions of naira running into trillions from the national treasury.
The saddening aspect of this state of affairs is that before 2015 when the economy was in full swing, growing and creating a larger number of jobs, Nigerians were informed by the Nigerian National Petroleum Corporation that we were using not more than 35 million litres of fuel a day. But that figure was disputed by many Nigerians who believed that the NNPC and marketers may have inflated the quantity of fuel so as to claim more money from subsidy.
Nigerians will recall that so many oil marketers were indicted and they are facing prosecution for monumental fraud, which revolved around over-invoicing of subsidy claims or claiming subsidy for importing virtually nothing.
After the economy entered recession, many jobs were affected, many companies closed shop and subsequently, the recovery in economic growth terms has not matched population growth, the NNPC comes out with figures, saying that we are now using an average of 55 million litres of fuel a day, which is an addition of 20 million litres to the figures it declared when the economy was growing at 6 to 7 per cent.
Before the present regime, there were private sector oil importers and marketers who were involved in the business of importing refined crude oil. Now, the NNPC is the only player in town, considering the claim that the landing cost of a litre of crude oil is above the approved retail price of N145. Thus, only the Federal Government is in a position to take up the excess on top of the retail price, which is the subsidy. By adding extra 20 million litres a day, the government and the treasury is simply being unduly bled from two points. The first point is the subsidy, which should not have been in place. The second bleeding point is the imaginary, fictitious and excess millions of litres of fuel and the claim, which goes into private pockets. The fact that the claims by NNPC are highly inflated and fraudulent is not just made by Nigerians alone, but also by highly respected institutions like the World Bank. The latter, in its Nigerian Biannual Economic Update for Fall 2018, stated that these petroleum import figures were highly inflated.
Regarding the inflated NNPC claim, two scenarios are possible. The first scenario is that they do not import this quantum of refined products, but simply make up the papers to claim public funds for their private use. The second is that this quantity is actually imported and smuggled across our borders to the neighbouring republics where the price of refined petroleum is more than double our pump price. Whichever scenario that applies, none of them is favourable to the NNPC and sister agencies like the Customs.
The most troubling aspect of this N731 billion expenditure is that it was money spent without appropriation and in contravention of the clear provisions of the 1999 Constitution, which states that no monies can be spent without the legislative imprimatur of the National Assembly. There was neither an executive request for the expenditure of this sum of money nor an enabling legal framework authorising the NNPC to spend without approval. This is fiscal dictatorship. It can also be seen as a basis for impeachment proceedings in any civilised environment because this has been the practice since the current administration increased the pump price of petroleum products.
When it is recalled that the governance aspect of petroleum reforms in the Petroleum Industry Bill was passed last year and the Presidency refused to sign it into law, it shows that the executive is happy and satisfied with the current opaque and sub-optimal management of our oil resources. Our leaders are living in denial and they have failed to disclose the true state of the economy to the common people. A very huge disconnect exists between available resources and the expectation of the average citizen. While resources are very scarce, many Nigerians have been made to believe that we are not just rich, but also very rich. In this scenario, subsidy is presented to the public, as being retained for the benefit of the common people, while, in actual fact, it is retained for the benefit of the fat cats who simply make a kill out of an otherwise very bad situation.
Also, for inexplicable reasons, we are perpetually under collecting oil and gas revenues and within the past four years, we have failed to meet the required targets. It has been one excuse after the other. But successful nations do not thrive on reasons why they failed, rather they write literature on their critical success factors.
Nigerians need to be told the truth about the critical bleeding of our economy; that we can no longer continue this waste under the guise of fuel subsidy. The Petroleum Industry Bill, in all its ramifications – administration and governance, environmental and host community issues, as well as a new fiscal framework, is long overdue for passage and presidential assent. The time to act is now.