Petroleum Minister, Rilwanu Lukman, who announced the government's decision on the probe at a stakeholders' meeting in Lagos, should be ashamed that for three months running, the nation has been held hostage by acute fuel scarcity while the Nigerian National Petroleum Corporation (NNPC) that he supervises continues to be the sole importer of petroleum products into the country.
Besides the prevalence of corruption and the overwhelming secrecy surrounding the management of the petroleum industry, the present supply crisis in the sector reveals the Federal Government's lack of interest in building fresh refineries to cope with growing consumer demand for refined petroleum products. The government also feigns ignorance of the fact that the cyclical shortages have been fuelled by the near-total dependence on imports in the past 12 years. The government's lukewarm attitude towards domestic refining has created the undue monopoly of the NNPC and a cartel of exploitative marketers who are calling the bluff of hapless Nigerians. Most unhelpful is the government's continued preference for exporting crude oil over and above the necessity of developing the capacity for local processing and the export of refined petroleum products.
The Ministry of Petroleum has failed to encourage private investors in refining, through lack of proper incentives (like guaranteed supply of crude oil to local private refineries), despite promises since 1993. That is one major reason prospective refiners with provisional licences have been unable to commence actual construction work. Government cannot be said to be serious about attracting foreign investors to build refineries, at a high cost, in Nigeria, when the investors are required to source crude oil from the international market. The situation is worsened by the Central Bank of Nigeria (CBN)'s monopoly in unilaterally determining the exchange rate of the proceeds of the nation's oil exports. This 'double monopoly' - of the NNPC and the CBN - has stifled economic growth and continues to undermine the desired liberalisation of the sector, which should have enthroned more active private sector participation.
Setting up numerous refineries locally will project Nigeria, Africa's largest producer of crude, as the hub of refined petroleum products on the continent. Related to this will be the benefit of expanding Nigeria's petrochemical industries to provide sundry industrial, pharmaceutical and electronic components. This would support millions of jobs in the areas of production, distribution and marketing of processed products. Venezuela, another major oil producer, for example, had attained adequate refining capacity in 1993 for all its locally-produced crude before its state-owned petroleum corporation initiated a vigorous investment drive abroad.
On the alleged missing 90 million litres of fuel since December 2009, we urge the EFCC to investigate the case and make arrests as appropriate. The public should also be fully briefed on the outcome of the investigation and the whereabouts of the missing fuel. That the government has remained unable to come up with a definitive position on deregulating the downstream oil sector is embarrassing. As much as the NNPC continues to be the sole importer of fuel into the country and the CBN's monetary policies persistently flood the economy with printed naira in exchange for oil export earnings, the confusion and mess will remain. Nigeria's crisis-prone gasoline supply has been mismanaged for decades. Barefaced corruption has aggravated poor management to an untold level. The havoc fuel scarcity has done to the economy is incalculable. It is commonplace, for example, to find even professors and other top professionals of all shades spending days on queues at filling stations. The national loss in productive man-hours is staggering.
Now that the Federal Government's version of deregulation - removing price caps without diversifying supply sources - has proved unworkable in resolving the myriad of problems confronting the downstream petroleum sector, it is time to stop playing the ostrich and halt the culture of mouthing mere slogans not backed by the required action. The government should urgently reverse all disincentives to domestic refiners, while working towards a review of the Petroleum Act and the passage of an acceptable Petroleum Industry Bill (PIB) to guarantee more investment in domestic refining.
Further, the abandoned bill seeking to prohibit, over a graduated period of time, the export of unrefined crude, should be resuscitated by the Presidency and the National Assembly, and passed into law. Exporting only refined fuel makes eminent economic sense. By so doing, Nigeria would earn more revenue to redress its grave infrastructure deficits, improve living conditions, mobilise thousands of idle hands for productive work and develop indigenous technical capacity to effectively take over control of its oil industry.