For Kachikwu, it is the morning after the party

It is normal for Nigerians to expect Emmanuel Ibe Kachikwu, first-class lawyer and experienced player in the oil sector, to perform magic as the Minister of State for Petroleum. As the petroleum supply becomes unpredictable and the queue at the few stations dispensing the product snakes out of sight, tempers are running short and many people are questioning the Change Agenda that propelled President Muhammadu Buhari to power. Kachikwu explained several times that the refineries are down, the major private importers of the products are folding their arms and the Nigerian National Petroleum Corporation, NNPC, is scampering to fill the gap.

By a twist of history, the man who was the Minister of Petroleum when NNPC was founded by the then Nigerian military ruler, General Olusegun Obasanjo, is now the elected President of Nigeria. President Buhari is also the substantive Minister of Petroleum. Ordinarily, Nigeria’s four refineries, with installed capacities of more than 400,000 barrels per day, should be enough to meet local demands. But alas! The four were working once upon a time. Today, they are often silent and our fuel is brought mostly from abroad.

According to Kachikwu, the Administration of President Muhammadu Buhari has substantially liquidated the more than N600 billion owed those companies who were importing the refined petroleum on behalf of the NNPC . Talk of taking coal to Newcastle! When President Olusegun Obasanjo came to power in 1999, he realized that the refineries were down. The NNPC big wigs gave him tons of memos on them and with a little bit of arms twisting they convinced him that what was needed was just Turn Around Maintenance, TAM. After some hundreds of million of dollars thrown into the problem, the refineries refused to budge. Then some experts advised that it was better and cheaper to import as it had been the case for many years during the military era. Afterall, are we not importing rice and toothpicks?

“It is cheaper to import than to refine here,” chorused the wise men of the NNPC and the egg heads supporting them. So we continue to import. We continue to subsidise the import and we continue to be sucked in further and deeper into debts. As Obasanjo was rounding off in 2007, they gave him another bill for TAM. He threw the bill away and instead opted to sell the refineries, call in private investors and liberalise the oil sector. But he waited too late and time was against him. After his protégé, Malam Umar Musa Yar’Adua was safely elected President, he took action. When Obasanjo announced the removal of petroleum subsidy in 2007, Nigerians responded with a nationwide protest. It was a turbulent finale for a remarkable tenure. Safely in the saddle, Yar’Adua reversed the decision, restored the subsidy and cancelled the sales of one of the refineries bought by a consortium headed by Aliko Dangote and Femi Otedola.

Our leaders need to have the ideological clarity that we are on the threshold of tremendous change now that it is the morning after the party.

Most Nigerians have always suspected that the oil subsidy business is a sophisticated scam. Now, we have Buhari, a man famous for his single-minded capacity for the pursuit of the truth. He is struggling to get a handle on the matter and Kachikwu is his arrowhead. There are two issues involved in this matter. One is the issue of ideology. The other has to do with capacity.
When General Murtala Muhammed came to power in 1975, the governing ideology then was that of statism. The ideologues, mostly top civil servants and academicians, were saying then that the state “must control the commanding height of the Nigerian economy.” This was a follow-up to the Indigenisation Decree of the post-Civil War era meticulously pursued by General Yakubu Gowon and his Federal Commissioner (Minister) of Finance, Chief Obafemi Awolowo. By the time Obasanjo returned in 1999, he had been mellowed by age and hard experience. He learnt the hard lesson that civil servants were poor managers of national assets. To confirm it, he saw the state of many of the national assets he and his colleagues left behind in 1979: the Nigerian Airways, the Nigerian National Shipping Line, the Nigerian National Supply Company, the refineries and many others.

Now Kachikwu is trying to travel on the same old road. It is wrong in a country that has chosen to practise liberal capitalism for the NNPC to be involved in fuel retailing as it is doing through the so-called mega stations. It is also clear now that the NNPC cannot manage those refineries. The refineries are old, but not irredeemable. They should be redeemed by private investors. Not that those ones are magicians or that they are better Nigerians, but at least the national treasury would not be available for them to do endless TAM. The corporation should swallow its pride and sell off those refineries.

Kachikwu is struggling hard, with his rolled up sleeves, to make a difference. But NNPC is a giant that is set in its ways despite the presence in the corporation of many highly educated, competent and patriotic Nigerians. What the minister needs to do is to change the course of the river and liberate Nigeria from the overwhelming influence of the old NNPC. Its track record, if the truth must be told, is worrisome. Out of the 35 fuel depots it has across the Federation, only nine are functioning. It presides over the continuous wastage of Nigeria’s natural gas and we still flare about 70 percent of the 21.1 billion cubic meters produced daily.

Moreover, the government should allow the oil importers to source for their own dollars and bring in the product at market rate. This year again unless it decides to change course, the government would spend at least N900 billion to subsidise fuel importation. This is not sustainable. In the short run, importation is necessary. However, the government should issue licences for small refineries with capacity to produce 20,000 to 30,000 barrels per day before the big players can join the game. The government should also take a decision on the Petroleum Industry Bill which has been with the National Assembly since the era of former President Goodluck Jonathan.

Nigerians, especially the government, need to accept that the oil boom is over. This is the morning after the party and what we have left is the hangover. But we still need to pay for the broken bottles. Unless we are planning to create another North Korea, we have to accept that the era of when the government controls the “commanding height of the economy” is over. Nigeria has embraced the liberal capitalism of the West and the consequences are clear. The government claiming to fix the exchange rate of the naira is an illusion unless it has the dollars to back it. The dollar and other foreign currencies would respond to the law of supply and demand not any government fiat or ex-Cathedral pronouncement. The late famous economist, Professor Sam Aluko, once said: “You cannot decree there must be yam when you have not planted yam.”

We need to realize that in the nearest future, entrepreneurs like Aliko Dangote, Tony Elumelu, Mike Adenuga, Jim Ovia, Fola Adeola, Oba Otudeko, Wale Babalakin, Leo Stan Ekeh and Jimoh Ibrahim, would get increasingly involved in the supply of electricity, management of airports, roads, rail, telecommunications, water, housing, healthcare, education and other social services. These people are not elected nor would they be subjected to term limitations, yet their influence and reach would be pervading. That is one of the consequences of capitalism.

Therefore, we need to have a responsible government that would always protect the interest of the public against the rising profile and power of the private entrepreneurs in public space. Our leaders need to have the ideological clarity that we are on the threshold of tremendous change now that it is the morning after the party.