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The case for privatization of NNPC… Part 2

By Odilim Enwegbara

Let us agree that commercialisation is no better option. It is no better option here because, unlike most modern economies, including our peer economies such as South Africa’s, Mexico’s and Brazil’s, where commercialisation meant that the day-to-day operations of state owned enterprises have simply made these enterprises profitable to the extent that rather than government subsidy, these commercialised enterprises have become major source of government tax revenue, Nigeria’s commercialisation will hardly end the deep rooted patron-client system that promotes corruption, incompetence, waste and high operations costs.

What this means is that with the same incompetent people in charge, corruption and mismanagement will continue to persist in the refineries. Besides, as a result of the commercialisation arrangement, state monopoly that brings no form of innovation in the subsector will continue at the detriment of the end product cost reduction.

Not even commercialisation will bring to end the inherent sabotage of the refineries by the big boys involved in fuel importation who connive with the managers of the refineries to ensure that the refineries are not producing petroleum products so that they are always imported with huge subsidies given to these importers.

We should not forget that commercialisation would equally amount to these refineries easily transferring their artificially created high costs of operations to the consumers who have no option or else they will threaten to go back to demanding government subsidising their day-to-day operations.

The whole gist here is that there is no way we will continue to subsidise the running of state-owned enterprises like the refineries that are supposed to be the leading sources of tax revenue generation for the state. And there is no way we should allow them to transfer their high cost of operation to Nigerian consumers of their products as a result of state enterprise monopoly.

We also know that the only way to avert the impending transfer of state monopoly to Dangote monopoly of the country’s downstream subsector is to fully privatise these dilapidated refineries so that their new private owners will have no option but to fight it out with Dangote for their corporate survival. That explains why the only possible solution is this: saying enough is enough of these state owned enterprises lacking transparency, accountability, and operational and performance checks and balance.

We should thus praise this pre-eminent business man turn politician for being bold enough and clear enough by insisting that if elected president he will waste no time in handing the refineries to the best private hands. His decision to do the inevitable could not be unconnected with his vast business insight. Moreover, Atiku remains the only Nigerian politician who has the clear understanding of how best to resolve these problems inherent in state owned enterprise, which unless resolved will continue to undermine Nigeria’s long overdue industrialization.

But rather than be bold enough to agree that the privatisation of our refineries will attract world’s best companies to participate in oil subsector of the economy, the ill-informed Buhari Media Organisation, decided to attack Atiku, wrongly insisting that his proposed privatisation of the refineries “would directly translate to increased price of petroleum products…with dire consequences on high transport cost aggregating in high inflation rates with massive decline in the standard of living of the people…”

While one can understand the grammar, there is nothing else to decipher from their grammar. Or are they ignorant not to understand that the privatisation of the refineries will boost the oil downstream economy of Nigeria not only by making petroleum products readily available but also having the current high pump prices drastically reduced, as competition drives down costs and as a result the price of the products?

It is quite unscientific for the BMO to believe the commercial pricing of petroleum products in Nigeria would amount to a great harm to citizens of Nigeria since keeping these petroleum products subsidised remains the only way to keep them “socially priced.” But for how long we continue to wrongly believe that the only way we could truly make petroleum products socially priced is for government after government to spend trillions of naira, including Buhari administration’s whopping N1.4tn spent within a year from the Excess Crude Account with due process?

The irony here is that while the Buhari media people continue to defend fuel subsidy, many powerful APC politicians are boldly speaking not just against fuel subsidy but, in fact, insisting that the Buhari administration’s fuel subsidy is synonymous with corruption, including opposition from such powerful APC members like Gov Abdulazeez Yari, who notwithstanding being both the Chairman of Nigeria’s Governors’ Forum and a leading APC Governor says this fierce opposition:

“When there was no cost recovery, the NNPC clearly gave us the number of 33 and 35 million litres per day as the consumption of Nigeria. But now that with the new regime of cost recovery, NNPC is claiming daily consumption of 60 and 65 million litres per day? So many of our international partners [have said] that even if we are feeding Nigeria, Cameroon, Ghana and Niger, we cannot consume more than 35 million litres per day. So we are wondering where the 60 million litres is coming from!”

But why shouldn’t the beneficiaries of this mind-boggling debt incurring and deficit guzzling refineries be alarmed that their means of stealing from our commonwealth would soon be in private hands? This goes to explain that after all, it is all about protecting their narrow interests than the interests of other Nigerians, particularly poor Nigerian.

If Buhari is truly this lover of the masses he has always pretended to be, then, why has he not come up with such unheard-of economic plans to aggressively grow the economy in such a way that the masses of this country would have been exiting poverty since 2015? Or from where else are these Buhari people expecting the good paying jobs to come if not from the private sector driving the economy?

Today’s under Buhari Nigeria resembles the pre-Deng China, known for having spent between 1949 and 1980 major portion of its annual revenues subsidising non-profitable, non-transparent state owned enterprises, filled with incompetent cronies of those in government. But even though it was a taboo to ever think of stopping what became the best way to bribe Communist Party members Deng Xiaoping the political wizard did the unimaginable. He wasted no time in demanding that all state enterprises be commercialised and where commercialisation failed to make revenue generators, they should be immediately transferred to the private hands.

Atiku knows that rather than subsidising our non-profitable refineries along with paying trillions of naira annually in fuel subsidy, by privatising the oil subsector and freeing money from the subsector, that money would be better spent on building schools, hospitals, roads, waterways, railways, mass housing, etc. These are the kinds of investments government should pursue since they can directly enhance the lives of the poor masses, those whose predicaments this government seems to completely ignore.

Politics apart, we should all applaud Atiku for already insisting that as president he will make sure that government is lean, productive, efficient, dynamic, and above all business-like that promotes growth, real sector firm investments, and jobs in their millions for Nigerians, which are only possible if we hand most of our unproductive state enterprises to the private sector.

Are we not lucky to have someone with Atiku’s kind of business background who with our votes will from May 29, begin to preside over the affairs of this country? Being a private sector player like Donald Trump who within a year in office turned the US economy around and set it on such astonishing growth path, Atiku remains the right presidential material this time around.

Like how Franklin Roosevelt came to preside over the affairs of America from 1932 to 1945 at a time the US economy was completely messed up by his predecessor Herbert Hoover, and like Deng Xiaoping brought in from 1978 to 1989 to clean up the economic and social mess caused by his predecessor Chairman Mao Zedong, we too have no option to bring in Atiku in 2019 if we want to witness the cleanup of the present economic, social and security mess caused by Buhari.

Having learned our lessons in a hard way, I strongly believe that this time around we the electorate has become wise enough not to repeat the same mistake in 2019. We need the president with the gift of presiding over our economic affairs with an eye to fix it once and for all and get Nigeria working again.

Enwegbara, a development economist writes from Abuja  

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