Fuelling chaos

A great many had thought that the issue of fuel scarcity had become a thing of history. The last time the country experienced fuel disruption was in May, last year. The reasons for our feeling of triumphalism over a problem that had proven intractable for more than 40 years were not farfetched. The President was Petroleum Minister during Obasanjo’s Administration in mid-70s. There is therefore this confident belief that he was conversant with the terrain and has had a good grasp of the intricacies, intrigues and politics of the oil industry. It is with predictable disbelief that we find the present chaos could catch him this much disturbingly unawares. The second reason is that, Nigerians trusted that the right man familiar with the turf is not just President of the country, but is also the Minister of Petroleum. The portfolio was presumably to warn manipulators to keep off. It was to say to them that the certified master of the trade who understands its language is now at the helm.

My take has been that the government cannot say it was unaware of how prone the Christmas season is to fuel scarcity. It is the period more than any other time that there is a great deal of movement across the country to celebrate Christmas, for the yearly family reunion and ceremonies, marriages and all. It is a period of township association umbrella meetings when the branch associations give account to the mother union on their community development programmes and discuss politics at the national level, state level and local council level and share experiences. It is also when those given seed capital to do business by benefactors, sponsors from their villages or from the community empowerment treasury render account. Until this second coming of Buhari, everyone was wont to plan with baited breath and brace up for the worst during the Christmas period knowing full well that it is when PENGASSAN, NUPENG, petroleum tanker drivers union, Senior Association of Oil Workers Union and kindred groups mindlessly seek to extract their pound of flesh and hold the country to ransom at the drop of a hat, at the least provocation either on the road or by their employers. Take for example, earlier this month, the Petroleum and Natural Gas Senior Staff Association of Nigeria alias PENGASSAN issued a seven-day ultimatum which was to expire on the night of 17 December, eight days to Christmas.

What was their grouse? The anti-union posture of indigenous companies and marginal field operators, principal among them for targeting, Neconde, which they accused of transferring employees at will and without consideration, and in fact sacking and intimidating union members. We have Dr. Chris Ngige, the Labour Minister and Dr. Ibe Kachikwu, the de facto Petroleum Minister to thank. They called them aside and rubbed balm on their boil. The PENGASSAN leaders pardoned us Nigerians, and gave us suspended sentence of three months in the expectation that we would behave and sin no more! NNPC officials were in attendance to bear witness. The consequences of organizational internal wrangling in the work place were unconscionably visited on everyone, including those who were not remotely connected with the company or the grievances of the workers, or who may never even have heard of the company called Neconde. There are terms of engagement in every company to which workers subscribe. There is bound to be disagreement in human organizations. If there is an irresolvable dispute, there is an industrial court established primarily to intervene between workers and their employers. But the customary calculation of union leaders is: Strike when the action would make the most impact on the society as a whole! Just fuel chaos, the supposedly deaf employers and the authorities would be forced to hear. What better time can anyone have for the impact than the Christmas period?

That is one aspect of the current fuel crisis in the land. The other aspect is the unresolved price regime between marketers and the government. How the Buhari Administration could have been so tardy not to envisage the possibility of malcontents and ill-disposed oil marketers lurking in the shadows striking at this period, with all the length of experience Buhari and eloquent Ibe Kachikwu have had in the oil industry, beats one hollow. There has been the unresolved issue of appropriate pricing. The marketers have been pressing for an increase in the pump price of PMS for them to recover their costs and have a little margin. They argue that the landing cost of petroleum product is above N145 and if any marketer imports he would have to make subsidy claims which the government does not countenance. The international price of petrol was affected by the advent of Hurricane Katrina pushing it up to $600. Importation has similarly been affected by the exchange rate of N306 to the dollar as well as bank interest rate of 25 per cent. The import price of petrol is, therefore, N171.40 by NNPC GMD Maikanti Baru’s own admission with the differentials of N26.40 per litre being absorbed by his organization. How this is done is still hazy as there has been no provision for subsidy in the budget and all proceeds from NNPC business is expected to be paid into TSA. NNPC Director of Public Affairs, Garba Deen Muhammed said NNPC has been coping through “diligent application of common sense with price modulation.”

The government has said no to any increase in the pump price. Obviously, the political correctness of such a step at this time with Buhari rehearsing for 2019 and Atiku gathering his ammunition as well as the fear of consequent inflation must have weighed heavily on the government’s stance. Here is an economy that is just exiting from recession and a government which is grappling with 18 per cent inflation. In other words, the undercurrents have been there for some time. A smart and proactive government ought to have known that sooner or later a showdown would ensue and would have had a Plan B in place to avert the disruption in the distribution of fuel. Another reason for the steep rise in the landing cost is a cut in the producing of PMS in winter because the producers concentrate on production of diesel in winter and they are unable to meet the orders of NNPC because it is diesel that is more in demand by their domestic customers to heat their homes. Obviously the government went asleep, not factoring all variables of the season into the supply chain, including the ownership of tank farms.

The Depot and Petroleum Products Marketers Association (DAPPMA) has said the depots of its members are empty. The association said on Tuesday that until recently, it was responsible for about 65 per cent of the nation’s oil import, Major Oil Marketers Association of Nigeria (MOMAN) for 15 per cent and PPMC/NNPC the remaining 20 per cent. But since last October, it is the NNPC that has been the sole importer. The association, according to its executive secretary, prepays for petroleum products, and orders paid for which have not been programmed nor loaded are in excess of 800million litres. The NNPC which is the sole importer since October has no tank farm of its own. It is the marketers who own the facilities and they say there is no petrol in their farms from NNPC. The question, therefore, of hoarding what does not exist does not arise in the first place.

For a business of this magnitude it is unwise, indeed unrealistic that the NNPC should be the sole importer. It cannot muster the executive capacity to import fuel for the whole country. It does not own tank farms. Here is what the marketers say: “It is on record that any time NNPC assumes the role of sole importer, there are issues of distribution, because it is marketers who own 80 per cent of the functional receptive facilities and retail outlets in Nigeria.”

The clamour that the downstream be liberalized has been with us for a long time. It once more raises the issue of the Petroleum Industry Bill (PIB) which addresses the local content issue and brings liberalization to the industry. It has been proven time and again that monopoly in any economy is ruinous and counterproductive. Where there is no competition the discipline of the market will be lacking. Where there is no discipline engendered by competition there will be inefficiency and wastes and the prices will not be competitive; they are inevitably high because the pricing becomes arbitrary. Yes, the Nigerian factor comes in most of our activities. This was in undisguised display during Jonathan’s era. As of now the marketers are owed about $2billion. The position of the government to tread the slippery oily ground is therefore understandable. However, at the end of the day, there is no alternative to competition. The fall-out of the Nigerian factor will be overcome once the judicial system improves in the prompt dispensation of justice. The government itself will need to strictly monitor abuses. As of now many regulatory agencies of the government do not exhibit the right spirit to monitor abuses. The dilemma of the government is obviously also compounded by the policy of price equalization throughout the country. It should be clear by now that that policy has to go. It is unrealistic, it has outlived its time and it benefits nobody.

Already, one of the NNPC chiefs, Mr. Mele Kyari, GMD, Crude Oil Marketing as far back as last year had expressed reservations on the NNPC being the sole importer of fuel. He did warn on 24 October, last year, (2016): “It is impossible to sell the product at the current fixed exchange rate. The burden would become too heavy if NNPC remains the sole importer of petrol.” Now, to resolve the fueling chaos, independent marketers are being encouraged to import, and incentivized with premium moving from $6 to $20 a litre.What ought to have been foreseen and done by an alert, less rigid government months back. You don’t wait until things collapse before you become flexible and make adjustments where necessary. The marketers, too, are blamable because they did not alert the nation with sufficient noisemaking when the NNPC became the sole importer of PMS, by their own revelation, in October.

The permanent relief will come when the Dangote Refinery comes on stream in 2019. The existing refineries have been bogged down by vested interests. Remember the yearly Turn-Around Maintenance of bygone days with attendant celebratory noisemaking which in the end hardly fetched the nation any enduring result. It is hoped that other investors will be encouraged to follow in Dangote’s footsteps and brave the odds.

Having said all this, we must recognize that it is a matter for concern that any union or organization would not shrink from inflicting harm on their fellowmen nor exhibit qualms seeing how their actions have fueled chaos and brought untold hardships on their fellow human beings who have to be on queues endlessly. That is apart from the effects on the economy and social lives of their compatriots. Scores of people sleep at petrol filling stations just to collect a few litters. Prices skyrocket with filling stations believing they are doing brisk business; travel plans are disrupted. Simple vehicular movements are nightmarish and in several instances even impossible. How can we think there will be no consequences for such inconsiderate conduct? Come to think of it, this reckless conduct coming during Christmas when multitudes wished to join their congregation in thanksgiving worship? As this column did say last week, we should just take a minute and conceive of the amount of blessings that would pour into our universe, our world, our nation and our homes if the more than four billion Christians on the face of the earth turn their gaze upwards to the Throne of Grace in joint Thanksgiving Worship, at the same period and at the same time!

This column has said repeatedly that this Creation is governed by higher Laws which are the expression of the Will of the Creator. They are immutable, they are perfect, uniform in all planes of existence, unchangeable, self-acting and just, bringing to each person in multiples what he or she may have put into Creation as harvests. The degree of compliance with them is what determines each person’s station in life which manifests as inequalities among peoples. It was at the core of Christ’s Teachings. What a man soweth that shall He reap, many times over, He admonished all mankind. Ignorance of these laws is no excuse nor does it offer protection, here or hereafter. In other words, as far as grievances are concerned there must be due process, as it must be in all things. Resorting to self-help brings entanglements with serious fateful outcomes.