By Azubuike Ishiekwene, azubuikeishiekwe@yahoo.com
Published: Tuesday, 19 May 2009
My heart went out to President Umaru Yar’Adua on Wednesday as he signalled the unofficial launch of his second term campaign by addressing four messy issues: Uwais report; Ekiti rerun; Halliburton; and petrol scarcity. On all four issues, he sounded genuinely concerned, even passionate. Yet Yar’Adua, being Yar’Adua, he not only pretended that he didn’t know where the problems really lie, he failed to say anything new about how his government will provide solutions.
I will deal with petrol scarcity here, because I fear that I may be sounding like a broken record on the other three issues. Also, since the President said that the petrol racket was the bastion of the country’s greatest institutional corruption, the issue deserves special attention. In his first address to the State House press corps since he assumed office two years ago, Yar’Adua said an unnamed mafia had persistently sabotaged government’s efforts to deregulate the downstream sector of the oil industry for the past several years. The result of this unwholesome mafia activity, according to him, is a distortion of the supply chain. And now, for the past nearly one month, the streets of the world’s sixth largest exporter of crude oil have been cluttered with embarrassing fuel lines, which threaten to spill into Aso Rock.
Did I say the President was concerned, but yet pretended not to know where the problem lies? That’s right. It’s not enough to put the blame on a faceless mafia or to promise to restore supply in two weeks. If the Yar’Adua government is really serious about fighting corruption and claims to have finally identified the country’s corruption headquarters, saying so and restoring fuel supply won’t do. The government should smash the nest of corrupters, round them up, and prosecute them.
But it can’t – or more correctly – it won’t. What do I mean? The day after the President’s holy rage against the mafia, the Minister of Petroleum Resources, Rilwanu Lukman, echoed him. He canvassed the virtues of deregulation and the need for the NNPC to throw open its fuel import license process to all qualified comers. I nearly doffed my hat for him until I reminded myself that this same angel of light was at the heart of a January 25 story by Next on Sunday, in which he was accused of a stunning conflict of interest in some oil companies that may well be NNPC’s present or future customers. How Yar’Adua could ignore the report and appoint a man with one leg actively in oil business as his minister of petroleum resources is difficult to understand. But that’s how mafias are made and preserved. The most entrenched mafias worldwide have one leg in government, and one leg out.
NNPC’s current procedure for awarding fuel import license is a mafia breeder. Until the country’s four refineries were wilfully destroyed, the government sold nearly 400,000 barrels of oil daily to NNPC at a preferential price for refining to supplement local demand. As long as the refineries were running, there was very little problem. To pave the way for the fuel import mafia, however, the refineries were destroyed, and large volumes of the crude oil which the government sold to the NNPC at a preferential rate were diverted to the black market. The government was later forced to cancel the preferential allocation. But heads or tails, the NNPC would always win. With the refineries comatose and preferential allocation stopped, a new dispensation began, with the NNPC retaining the right to import 60 per cent of the local petrol requirement – a right which is now outsourced to third parties.
The bidding process for a license to import fuel for NNPC’s subsidiary, PPMC, is advertised; so it looks transparent. But a source told me on Saturday that, “it’s the sort of transparency that has produced virtually the same inefficient result for nearly one decade.” The major importers have remained: Tri Quest, Zenon, Sahara Energy, Ocean and Oil, and Vitol. These NNPC contractors are often mobilised, and are entitled to between 10 and 15 per cent margin of profit in addition to demurrage and any other importation costs they may incur.
On the other hand, the independent marketers who source funds at market rate and who provide 40 per cent of the imports are paid the difference between the landing cost of the product and the pump price from the Petroleum Support Fund. Except for those who have chosen to turn a blind eye, it’s not difficult to see that the wormwood is inside the wood. Yet, the Yar’Adua government either pretends that it can’t figure out where the mafia is or that it can moan its way out of trouble.
Deregulation is certainly the right way forward – that is, privatise the refineries; allow all who wish to import fuel to do so; remove arbitrary price caps; and set up appropriate regulatory framework for the industry. But curiously, the chief advocates of deregulation continue to foster the status quo. The Minister of State for Petroleum Resources, Odein Ajumogobia, the Presidential Adviser on Petroleum Matters, Emmanuel Egboga, for example, visited some private depots in Lagos on Friday, obviously in pursuit of the President’s promise to clear the petrol lines in two weeks.
But surely, Ajumogobia and Egboga must know by now that they’re chasing shadows. The problem has never really been discharging petrol at the jetties in Lagos, even though overall supply has been hampered by corruption and incompetence at the government-owned jetties. The problem has been how to move supplies up country – or wherever there is the demand – in the face of sabotaged and or obsolete pipelines and bad roads. With the huge pot of money available at the Petroleum Equalisation Fund, contractors simply divert supplies wherever it is profitable to do so. They later forge documents to claim bridging costs, when they have, in fact, bridged nothing.
Government continues to pay for services not rendered because of the political objective that petrol must sell at a uniform price across the country, in defiance of common sense. A source at the PEF told me last week that the Fund set aside N35bn as “bridging cost” for 2008, and had only paid out N17bn with the balance, mostly bogus claims, yet to be reconciled.
The truth is that the whole corrupt chain remains an essential part of government’s war chest of patronage – to slay the beast is to drive a nail in the government’s own artery. Does the government have the will to do it?
No comments:
Post a Comment