by Kunle Sanyaolu

THE current face-off over planned deregulation of the oil industry is certainly a hard nut to crack for the Federal Government. On the one hand is government, flaunting huge financial statistics to persuade Nigerians that deregulation is inevitable if the country is to make meaningful developmental progress. In particular, government says it spent N654.7 billion on subsidy in 2008, and that it has so far this year spent N602 billion. Now, those are huge sums. But the Nigerian workers who are on the other side under the aegis of Nigerian Labour Congress (NLC) maintain that they cannot contend with the probable consequences of deregulation at this time, and therefore the regime of subsidy must continue. Top on the identified consequences of deregulation is the likelihood of petrol selling for more than N100 per litre. Without doubt, even a slight increase in fuel price will jack up all-round inflation, as prices of other goods are largely dependent on cost of transportation. Still on the side of the workers without actually saying so are the Manufacturers Association of Nigeria (MAN) which enjoins governments, if it must deregulate, to at least subsidise diesel price for its members, until government attains the targeted 6000 megawatts of electricity by the end of next month. The thinking is that production cost, even if high now, will remain stable for a while if the diesel subsidy is approved; and consequently, the MAN members can stay in business. Underlying this notion is that Nigerians (trust us) will shortly flood the market with cheaper, if substandard imported goods if their counterparts produced locally are priced on the high side.

The workers started their protest rally three days ago in Abuja. One can presume that they are strategizing right now on the next stage. After procrastinating and failing to perform on planned deregulation for years, and consequent upon its assertion of the huge public waste being incurred over subsidy, government understandably is unwilling to retrace its decision to go on full deregulation. On the one hand, it appeals to workers to shelve their strike threat. On the other, officials say deregulation needn’t translate into higher fuel prices, particularly in the long run. Then its olive branch: money saved will be used to provide much-needed public infrastructure. Nigerian workers understandably are adamant. Under the past government of Olusegun Obasanjo, official promise to provide measures to cushion the effects of high fuel prices never materialized. Instead, the new prices ended up simply compounding workers’ woes, and of course the plight of the unemployed. Their instinct tells them that government is government. A leopard does not change its spot. To Nigerians, believing government is to believe anything. Government, whether Obasanjo or Yar’Adua remains at fault for predicating its deregulation entirely on fuel importation, when we have three refineries that could be made to produce a reasonable portion of locally-consumed fuel. But then, the refineries are perpetually working under their capacity, and they hardly respond well to huge funds government throws on them regularly for maintenance. Worse still, no one seems interested either to buy them, or to build new refineries, for fear that they wont have control over the price they will sell their products. At the end, government feels its only option is to completely hands off, or deregulates, as a way to encourage private participation in fuel production. Yet, the feeling is also strong among a section of Nigerians that no responsible government should leave the livewire of its economy on private hands. It is further argued that the global trend, based on prevailing economic indices, is regulation, not the other way. And that Nigeria should be no exception. These are arguments one can take to any length, and yet remain fixed on a spot. One thing is clear however. The current circumstance of subsidy is not working, if only because it sustains inefficiency in the downstream sector, and it provides government a ready excuse for not performing its duty. If one agrees on this, we should be ready to concede a change, even if for a period of trial. Let us see if the sector will improve with deregulation. And let us try and hold government to its assertion that deregulation should not unduly provoke outrageous fuel prices.

One is reminded of a terse statement credited to House of Representatives Speaker, Dimeji Bankole to the effect that the Federal Government has put in place measures to cushion the effect of deregulation. Although Bankole has not denied making the statement (as far as I know), there is nonetheless no certainty that he did make it; or that he was not reported out of context. What struck me from the news report is the casual reference to the cushioning measures, and of course the fact that the statement is coming from the head of a lawmaking chamber, rather than a member of the executive arm of government. One noticeable point is that the statement is devoid of details of the supposed measures. In fact, subsequent paragraphs of the report referred to Bankole as saying that all stakeholders were already discussing the deregulation policy to avoid any negative consequences. Somehow, there is an impression that Bankole, rather than asserting that government had actually put measures in place, was only hopeful that with the discussions in progress, government was sure to avert ugly consequences of the deregulation. Overall, the report was not assuring. First, Nigerians need to know the details of those measures… whether they are actually in place, or in the pipeline. Second, government’s concerted effects in the past either to put such measures in place, or to assuage the fear of Nigerians by merely assuring them, have yielded no dividend whatsoever. So why would anyone take the Speaker seriously this time around. We haven’t seen any concrete measure. Yet, many people feel that such measures should be the first to be established, ahead of the deregulation. The truth of the matter is that government has not shown that it has a reputation to save money. No sooner does government saves than it would discover a need to spend. But Nigerians are not ordinarily averse to government spending, except when this is done recklessly, and outside the public interest. Unfortunately, this kind of spending, including spending sprees on big but needless or white elephant projects is mostly the order of the day.

Without prejudice to the NLC’s efforts to negotiate new wages for workers, I doubt if increase in salary will provide adequate solution to effects of deregulation. To be fair, the NLC is not seeking salary review as a counter measure to deregulation, but as an independent action against general inflation. But in case government is inclined to seize the opportunity to agree to wage increase and then tie it to deregulation, it will simply be postponing the harsh days for the people. To be sure, the postponement will not endure for long. This should be an opportunity to spend public resources for once to resolve public problems, and in the public interest. For avoidance of doubt, the needs of Nigerians are basic: food, shelter, means of public transportation and jobs. Nigerians are ready to work, if given the opportunities. But they need to be empowered sufficiently to buy food items for themselves and families. They need cheap or affordable means of transportation. Many people now are expending at least half of their salaries or income on merely commuting to work and back. Housing problem is even more critical, because it cost a fortune to rent any decent accommodation. And most Nigerians are living in houses that are far from being decent. Above all, there is need to improve electricity supply, both as a measure of generating jobs, and to improve living standard. Thank God, the restiveness in the Niger Delta is being contained through government’s amnesty and post-amnesty programmes. Nigerians are anxious to see and feel the results of amnesty, most importantly in the area of electricity supply. I do not envy government in the challenges ahead over deregulation. But if President Yar’Adua succeeds in this regard, his victory over bad governance will be sweet for all Nigerians.