Deregulation honey or hemlock

Deregulation: Honey Or Hemlock?

History has a way of repeating itself, particularly in Nigeria. When the General Ibrahim Babaginda's regime wanted to introduce the Structural Adjustment Programme (SAP) in the early 90's, opposition mounted like the Zuma Rock in Niger State, overlooking the Federal Capital Territory (FCT) Abuja. Adrenaline rose in both the camps of protagonists and antagonists. By a combination of adroit diplomacy and state might, the government had its way but not without corresponding reactions manifested in the various riots and demonstrations with attendant damage to lives and property. In fact, some protagonists even went to the extent of betting with their lives that there was no alternative to SAP.

After about a decade, the nation is about witnessing an encore but this time around, over the deregulation of the petroleum sector.

Last year, when the pump prices of petroleum products were hiked, particularly the premium motor spirit (PMS) popularly known as petrol, hitting N22 per litre, Labour showed the people's displeasure through industrial strike. The government was accused of lack of consultation. Goaded by the desire to end the crisis in the sector manifested in the epileptic supply of the products and the consequent endless queues, the government was not done with the price increase. Towards the end of last year, a committee headed by renowned industrialist and former Minister of National Planning, Chief Rasheed Gbadamosi, was set up to look into the issue of appropriate pricing of petroleum products. The committee's membership was all-encompassing with members drawn even from labour.

In taking this step, the government was responding to allegations of smuggling of the products into neighbouring countries such as Cameroun, Chad, Niger and Republic of Benin. The argument was that the prices of the products in those countries were mouth-watering and somewhat irresistible to marketers. Part of the committee's report was a recommendation that the industry be deregulated so that more investors could come and the market forces of demand and supply would be the dictator of prices. The committee was, however, quick to advise that sustained massive awareness campaign should be carried out as a way of addressing the accusation of lack of consultation previously laid.

Interestingly, Labour which wrote an independent report calling for a rejection of deregulation has, like the government, embarked on its campaign to ensure that deregulation does not take place.

The Minister of Information and National Orientation, Professor Jerry Gana, who is the arrow-head of the government's campaign has said that no amount of increase in pump price by the government in the face of effective monopoly enjoyed by the Nigeria National Petroleum Corporation (NNPC) would put to rest the perennial scarcity of petroleum products.

The minister has equally blamed opposition to the proposal on lack of understanding of the concept of deregulation. According to him, deregulation, contrary to the interpretation in certain quarters, does not mean increase in the pump price of petroleum products. In a deregulated regime, he further explained, the prices might be cheaper as there would be many producers of the products and the market would become the buyer's market as against the present situation where sellers of the products have both the bread and the knife.

The current situation, Gana also contended, has tilted the burden on government since government pays heavily to subsidise. Last year alone, the minister stated, government lost about N160 billion to subsidy on the products. This kind of burden, the minister maintained, government wanted to throw away.

Piqued by the situation, the Senate via its Committee on Petroleum, embarked on a public hearing with a view to synthesising the views of Nigerians on the issue of deregulation.

Bringing the matter to the attention of the upper legislative chambers before the mandate to organise public hearing was given, the chairman of the Senate Committee on Petroleum Resources, Senator David Brigidi lamented that despite the copious availability of petroleum products in the country, economic activities have been paralysed due to people's inability to access petroleum products.

The Senate noted that it had become a global embarrassment for a nation to be sitting on oil and yet goes outside to beg for it.

Presentation by different groups and individuals since the committee started sitting early March have been quite thrilling and intriguing. All agencies of government that made submissions gave tacit endorsement to the proposal. The Central Bank of Nigeria represented by the Deputy Governor in charge of Banking and Monetary Policies, Dr. Shamsudeen Usman, said that deregulation would put an end to price differentials currently being experienced in different parts of the country.

The Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mr. Jackson Gaius Obaseki, explained that the NNPC had almost exhausted all known methods to end the scarcity but saboteurs within the industry would not allow solutions to work because of their selfish interests.

He went further to explain that for the first time in the history of the nation, the corporation increased the supply to about 25 million litres per day but the situation refused to abate. He, therefore, submitted that high-level hoarding and smuggling by some unpatriotic Nigerians and foreign collaborators made nonsense of NNPC strategies. Maintaining that the corporation would continue to do its best to satisfy Nigerians despite all odds, Obaseki, however, endorsed deregulation as the enduring solution.

The Nigeria Customs Service on its part blamed the situation on hoarding while it supported deregulation in its presentation.

However, some members of the Senate panel on the public hearing expressed positions diametrically opposed to the deregulation option.

Senator Adeseye Ogunlewe advocated removal of the subsidy being granted to the NNPC and called for the spread of the subsidy to cover all marketers. In spite of the subsidy, he pointed out, the corporation has not met the nation's expectation in terms of availability of the products.

Senator Gbenga Aluko condemned the government's move on the ground that it is ill-timed. In his view, what matters now is for the government to find means of putting the indigenous companies in a position where they would have financial wherewithal to compete with foreign companies.

As the situation is now, he contended, any attempt to deregulate would transfer the monopoly of the market to foreigners, to the detriment of Nigerians. Senator Aluko, citing the economic history of America and Britain, noted that Nigeria is rather in a haste to deregulate. "Why the hurry?" he queried.

He recalled that both America and Britain embraced deregulation after almost 200 years of nationhood, stressing that "for now, I don't think we are ripe for the exercise."

The former Senate President, Dr. Chuba Okadigbo, argued that what is referred to as subsidy does not exist because the "money belongs to Nigerians and not any entity from Mars called executive." He continued: "It is the people's oil; it is the people's money. So give it to them and let them enjoy it."

A rather curious discussion has been added to the entire conundrum. Despite Gana's statement last week that the government had not taken a position yet because consultations were going on and the outcome of the exercise would determine the government's action, the President, last Tuesday, sent a bill to the National Assembly seeking approval of the legislature to establish Autonomous Petroleum Prices Regulation Agency. Industry experts have expressed fear that the action of the President was tantamount to reaching a conclusion on deregulation.

As it were, NLC has taken some steps through mobilisation of its members for rallies which have been organised in some states.

Some of the operators in the industry, while not against deregulation, however, advised the government to put certain things in place before deregulation could be effective in Nigeria. Mr. Joe Obiago, the Chief executive of Global Energy Company, said the government should ensure safety of lives and property, good roads, uninterrupted power supply, effective communication, good water and other infrastructure required to make life worth living in the country before deregulation can operate smoothly.

As things stand now, the stage depicts a clash of people's wish versus government's might as the latter, in spite of the hue and cry, appears to be marching pertinaciously with its gospel of deregulation. To the workers, represented by the NLC, deregulation is as loathsome as the dreaded Acquired Immune Deficiency Syndrome (AIDS), whereas in government circles it is the elixir to the chameleon face-like scarcity of products. Both camps now keep sleepless nights churning out propaganda strategies. The days ahead, in the event of either party winning, will tell whether deregulation is honey or hemlock.