Chief Frank Ovie Kokori is a labour activist and former Secretary General of the National Union Petroleum and Natural Gas (NUPENG) workers. In a chat with KAMAL TAYO OROPO, he stressed the need for supply to meet demand before serious discussion of deregulation of the sector can become useful. This is even as he laments situation where government’s intervention is only visible mostly in parts of Lagos and Abuja.

• Nigeria Should Take Advantage Of Current Situation Of Low Price • Less Emphasis Should Be Paid to Lagos, Abuja

There have been talks of unfair price margin in the purported deregulation of oil sector. Marketers lament while they procure the commodity at N90 per liter; they are expected to sell at the stipulated N86.50 per liter. The price of the commodity is also not uniform across the country. What is your general view on the deregulation regime?

WHAT is called profit margin has been taken care of now. There is no way you will ask someone to participate in a business venture without taking into consideration the business interest that will enable him or her remain in business satisfactorily. There is no way the profit margin would not be taken care of. The problem we are having is that some of these independent marketers want to make huge and unrealistic profit overnight. Some of them operate in a manner suggesting that there is no tomorrow and a year profit should be earned in just one day.

The whole gamut of profit margin may not be real issue here. Otherwise, how have the major marketers been surviving with the so-called small margin or no profit margin? They all get the same margin. Frankly, I don’t think we are getting to hear the truth of the matter yet. The whole price margin thing does not appear, to me, the critical issue. In any case, the agency regulating the sector held a meeting with them and arrived at what was believed to be acceptable profit margin. Presently, I believe they should be getting about N5 per liter; or something in that region. Before, they were getting something like N1 or N1.50k.

The government has been criticized for unnecessarily tinkering with what is on ground, rather than deepening what it met. Would it, in your view, be necessary to maintain the status quo?

The issue is not with the status quo remaining or not, but there will come a time when the oil price will go up and will you be talking of status quo then? Then you will be talking of subsidy over and over again. What everybody knows now is that oil has fallen all the way below 40 dollars per barrel and it is going to remain so for a while. It is very low now and we should take advantage of things by allowing the situation to take care of itself now; before we get to a situation where the price will move up again. As far as I know, the so-called fuel subsidy in the country is only enjoyed in Lagos and Abuja; where you can get the commodity at the stipulated price of N87 per liter or N86.50.

What I believe should be done is to call all the stakeholders –– independent and major oil marketers, NUPENG, PENGASSON, Nigeria Labour Congress, etc –– together and talk reality with them. First, if there were sufficient supply, it would be easy to talk about stipulated price, but where there is shortfall, there is little you can do to control the price.

As we speak, this morning I bought fuel in Warri for N120 per liter; I was left with no option. If the majors are not selling, insisting that they do not have, then you will want to buy from anywhere. Even the designated NNPC depots sell at N110 or N120 per liter. Everyone should sit down together; especially with the NLC. Once there is consensus, Nigerians have no option but to tow the line so agreed. We must get the NUPENG, PENGASSON and the NLC fully involved. They must be carried along. There should a kind of heart to heart frank talk. There is no point in a subsidy that cannot guarantee supply of the product. We cannot be talking of normalcy using only Abuja and Lagos as yardsticks. There is no point in throwing the whole country into unnecessary hardship under whatever disguise –– subsidy or not. This issue should be tackled once and for all this year; especially now with strong government in power.

In Delta, for example, you cannot control the system because the supply is still minimal. In economics, you talk of forces of supply and demand. Generally, the supply is very low relative to the demand of the country. But it is only the people in Abuja and Lagos that have relative demand meeting supply –– at least to an extent, which is why the stipulated price is fairly easy to enforce.

But then, when there is absolute scarcity, we, here in Delta, can still buy it at the N120 or even N130, but in Lagos you will not even get it. It is easy to say in Lagos or Abuja that, ‘if you don’t sell at stipulated price, you will be arrested,’ but not that easy in many other parts of the country.

Is total deregulation possible under the circumstance?

Actually, everywhere in the world there is one form of regulation or the other. You cannot just always leave the people to the whims and caprices of profit-driven investors or marketers. Particularly in the Nigerian oil sector, you cannot just allow the independent oil marketers to do as they wish –– they are different from the major oil marketers.

Whenever the major marketers agree with government over an issue, they significantly keep to the terms of the agreement. But you cannot say the same thing for the independent marketers, who most often do what they like despite whatever agreement reached with them. As such, there must be a strong regulatory agency like the Department of Petroleum Resources (DPR) to ensure sanity. Sadly however, it does appear that agency, DPR, is only effective in Abuja and Lagos.

Beyond this however, I believe that one of the biggest problems we have in this oil sector is gross indiscipline. Once there is discipline in this country, many other things will begin to fall in place. Fortunately, we have a very discipline President at the helm of affairs this time around. My expectations are such that things would be significantly different from previous experiences.

For now, there is a problem in the supply chain. Obviously, what is coming into the system is less than what is required. In other words, our demand is higher than what is being currently supplied.

What should the government be doing to meet domestic consumption at least, in the short term?

I understand the government recently liquidated some of the monies owed the marketers. As such, I expect the supply to significantly rise. In fact, I expect the market to soon be saturated; it’s increasingly becoming obvious. During the dying days of the Goodluck Jonathan-led administration there was backlog that were not cleared. Now, that they have gotten the money, they have no choice other than to play their parts.

At least, there are times in this country that there will be no problem for as long as seven months and the whole country can buy for N97 or N87 as the case may be; including deep in the Southeast, where things are always tough. Even in Port Harcourt, which is the center of oil, there is always problem there. Also in Delta, particularly Warri, where only the major marketers are selling at N87; and they are only open once or twice in a week, the rest of the days, their gates are permanently shut. There have been allegations of diversion to black market. But the independent marketers are always having fuel, selling at N120 and sometimes at N160 and no one is disturbing them.

That’s the difference between here in Warri and Lagos and Abuja. In the heart of Lagos, I am not talking of Mafoluku and Idimu areas where marketers do what they like, but places like Surulere, Yaba or Lagos Island, where nobody sells fuel above controlled price. Even in Abuja, the moment you go out of the main city, marketers sell as they like. The whole thing still boils down to discipline and leadership. However, the moment the supply stabilises, there would be no problem.

Will you support total removal of subsidy?

It is unfortunate that the subsidy thing has acquired a life of its own and becoming so fraudulent. The prediction in the international oil market is that it will take a long while before the price will climb to about 60 dollars par barrel. Not long ago we were enjoying fuel being sold for 140 dollars, later 130 dollars and 100 dollars. Now, it is very low at less than 40 dollars. One day, we know it would rise again. But this is the time for government to handle those issues once and for all. A strong regulatory agency like the DPR should be properly reinforced.

What we need most crucially in our national life is a committed and sincere government. If I were in this government, what to do is sit down NUPENG, the labour movement, marketers and other stakeholders. Everybody knows his or her interest and stake, you will get your message across and get things done. Those people will not sit down and take useless decision against the country. The government should sit down with these organisations and get across to them what is best for the country.