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Oil Subsidy Regime: Where Fixers Are The Saboteurs

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Student Loans: What Is The Benefit For Masses?

By Ali Abubakar Sadiq

During the Anti-Corruption Summit in London in 2016, former British Prime Minister, David Cameron, having an inkling and/or insight into Nigerias corrupt oil industry, in a conversation with the Archbishop of Canterbury coined Nigeria as Fantastically Corrupt. An angry Buhari who was at the summit, when asked by a reporter if that was true answered Yes and when further asked if he is going to demand for an apology from the Prime Minister he simply said I will be demanding for the return of assets meaning stolen assets by Nigerians and stashed away in UK (the safe haven and twin partner in our corruption?).

Nigeria is consistently ranked among the elites of corruption for the past four decades and I can dare say 90% of Nigerias corruption stems from its oil industry. Simply because soon after independence, Nigerias economy became a mono-economy, relying on oil for over 90% of its revenues. The oil industry was shrouded in secrecy without any semblance of transparency, akin to a Cosa Nostra, thanks to Abdussalmi Abubakar, who was the first Nigerian leader to refused to award the petroleum Ministry portfolio to anyone when he succeeded Abacha in 1998. His successor, The Transparency International Guru, Olusegun Obasanjo followed suit and the Ministry was kept under his wrap for eight years. YarAdua appointed Rilwan Lukman (who happened to be IBBs petroleum Minister way back between 1986-1990) while Jonathan appointed Diezani as minister to the Ministry, but when Buhari came he resurrected what Abdussalam and Obasanjo did (perhaps it is a military thing, right?).

Can a leader, civilian or military, combine the portfolios of the presidency and petroleum ministry? Before looking at the constitutional side lets us see what the job entails first. A petroleum minister in Nigeria is responsible for implementation of policies and programmes, supervision of major parastatals under the ministry (NNPCL, NAPIMS, NLNG, DPR, NGC, NPDC and of course OPEC matters). He also oversees 7 other agencies under the ministry (NNPC, NURC, PTI, PTDF, NNRA, NCDMB and NMDPRA). Under the petroleum act, the Minister is empowered to set prices of petroleum and he is the apex regulator of the industry. In fact, the alpha and omega of oil matters in the country.

It was because of such demanding schedule that in 2002, the then Speaker of House of representatives, Ghali Umar NaAbba challenged Obasanjo to appoint a minister of petroleum. But Obasanjo refused and sighted Section 5 of the 1999 Constitution which says The Executive powers of the Federation are vested in the President who may exercise same directly of through the Vice President, Ministers or officers in the public service of the Federation”. The rest was history as we all know.

Going back to history again, in 1977, The Punch Newspaper published an alleged loss of $2.8 Billion Dollars, during the first reign of the first petroleum Minister, Colonel Muhammadu Buhari. The Obasanjo government set up a crude oil sales tribunal to investigate the operations of the Nigerian National Oil Company (NNOC) which later that same year metamorphosed into NNPC (and Buhari was its first chairman). The final findings of the Tribunal was that in 3 years the Nigerian National Oil Company had failed to collect its equity share of oil produced by Shell, Mobil and Gulf oil, amounting to 182.95 million barrels of oil production thereby losing $2.8 billion dollars. A precedent that would bedevil the oil industry for decades to come.

Fast forward to 2015, when Buhari was elected, he retained the petroleum Ministry portfolio for two terms, making him the longest serving Minister of petroleum in the history of the country (for 11 years). We have to take Buharis unglorified 8 years as a case study, considering he had the goodwill of the masses and all the right reasons to clean up the mess in our oil industry, but unfortunately he worsened things up. I have to confess I am not very good at mathematics even in school, so please help me reconcile the following statistical figures. From 2016 to 2023 the Buhari administration had cumulatively received oil revenues amounting to $219 billion dollars, which at an average exchange rate of 403 naira to the dollar is 88 Trillion Naira. At the same average exchange rate, he budgeted $180 billion dollars (about 72 Trillion Naira) within the same period. One can easily see the difference between oil revenue and budget (about $39 billion dollars), not forgetting the fact that no budget was ever implemented 100%. On top of that one has to add the non-oil revenue that was proudly announced to have surpassed at one time, oil revenue. Within the same period, 2016 to 2023, under the Buhari administration our cumulative debt is $180 billion dollars, minus the $57 billion dollars at December 2016. Thus in his seven years had borrowed $123 billion dollars on top of $219 billion dollars of oil salesmaking $342 billion dollars.

To simplify things for fellow readers that are not good at math like me, let us take a single year during the Buhari administration. I suggest we look at year 2020, simply because it has the second lowest figure of revenue generation in a ten-year period. It was early in the pandemic but our oil output is averaged at 1.9 million barrels, but the pandemic, due to lockdowns across the world had forced oil prices to plummet as low as below $40 in some period. However, the average price was $41 dollars per barrel and using the official exchange rate that year of =N=359 to a dollar, our oil revenues reached =N=10.2 trillion (that is $28 billion dollars). Ironically, Buhari budgeted =N=10.5 Trillion Naira thus our revenue missed covering the whole budget by mere 300 billion. Remember the above is just our oil revenue, what about the non-oil revenue? Yes, in 2020 it fetches =N=1.8 Trillion. The non-oil revenue should clearly upset the 300 Billion deficit and leave surplus of =N=1.5 Trillion, right?, well that year a deficit of =N=6.9 trillion was reported. On top of all that, the DMO said Nigeria borrowed =N=4.5 Trillion ($11 billion dollars) in 2020, despite the pandemic too. That is why I hate math since my schooldays, is it that my addition is defective or there is an abracadabra going on? I leave you with the math.

Considering all these figures, is there anything on the ground after eight years to showcase by the Buhari administration which is commensurate with the humungous amount? With rising oil prices after coming out of the pandemic, Nigeria had earned $115 billion dollars in 2020, 2021 and 2022 alone. Except for the 2nd Niger Bridge I dont think there is any major project which Buhari had completed and commissioned in 8 years. Abuja-Kano highway and Lagos-Ibadan highway, AKK pipeline, Kaduna-Kano rail, Kano-Maradi rail, were all on the pipeline while Ajaokuta, Baro and Mambila are still on paper.

The same APC piloting the affairs of this nation in the last eight years is still in power with a new President. In his inaugural speech, carelessly or callously or perhaps it is purposely, he mentioned the removal of oil subsidy. Yes, the reality is that subsidy is a monster that must go away, but the question is how? It is obvious that APC under Buhari had dealt the greatest blow on our oil industry because for the first time, all our refineries were comatose. They came in and met three epileptic refineries but they left four dead ones. Still they are lucky to salvage the situation as Dangote build his own refinery under their watch. Any leader that is sympathetic and emphatic to his people should have delayed the subsidy removal until August, when Dangote said he will start bridging oil from his refinery. That way there is going to be a seamless and less painful transition into the post-subsidy era. The ailing economy together with ailing masses cannot sustain the harshness of outright removal of subsidy after just emerging from the traumatized Buhari era.

The abracadabra going on in our oil industry is unprecedented and the only way Nigeria can move forward and start enjoying its God given resources is for Tinubu to do three things: First, Remove subsidy, yes subsidy is monster foisted on Nigerian due to the systematic killing of all our refineries by APC Government, thus it shouldn’t have been in place at all. Its removal must be in a well laid out plan to be tactfully implemented in synergy with Dangote, marketers and all stakeholders (and refineries revitalization through sell off must be included). Secondly, Tinubu must borrow a leaf from Atiku in selling off NNPC to private hands. NNPC was born into corruption and many people including civil servants and politicians, foreign companies and even foreign governments collude in its corruption. Therefore if you axe NNPC, 90% of corruption in Nigeria will go away. The third and final one is to cut government spending at all levels. What many people dont realize is our budget, year in year out, is no more than a ritual for the ruling elite. Because every year 40% goes to recurrent expenditures, 30% or more on debt servicing and the reminder goes to capital expenditures (which is a restrictive club of the elite) which on the ground isnt holistically executed. So tell me, what benefit does the real masses enjoys from the trillions budgeted? Cut also the trillions our elites enjoys in tax waivers (according to Falana it reaches up to 60 trillion in the past years). Successive governments had been brandishing cutting oil subsidies for masses in a ruse to maximize thier careless spending on themselves. Unless Tinubu heeds Buharis timeless advise We must kill corruption, or corruption will kill Nigeria but certainly away from the manner in which Buhari tackles corruptionelse, the pains to come on leaders and the led, we cannot even begin to predict.

aleesadeeq1@yahoo.com
08039702951

Hammed Tajudeen is a graduate of Osun State Polytechnic, Iree with Higher National Diploma (HND) in Mass Communication

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