Rethinking Nigeria’s Oil and Gas Sector: A Call for Action

I have been quiet for a while because there is nothing more to say about the oil and gas sector. I have tried to proffer my little “ten kobo” solutions, which nobody tends to be listening to. We all saw this subsidy imbroglio coming, but the immediate past administration would rather play politics with the issues on the front burner now. We cannot do the same thing repeatedly and expect a different outcome.

I am glad the internet never forgets. I knew long ago we would be at this subsidy bus stop. I remember I said in one of my posts that it would be unfair to leave the subsidy issue to the successor of PMB just because they want to win elections. I even went further to say that the incoming President would wish he never became one because the terrain would be rough and tough.

On July 19, 2022, almost a year ago, I was granted an interview in Vanguard newspaper which could be accessed online. In that interview, I said things were changing fast for the worse and at a breakneck pace. I reminded Nigerians that Nigeria’s population growth was at a geometric progression, with its economic growth rate progressing arithmetically. Succinctly put, Nigeria’s population growth rate is three percent, and her economic growth rate is less than two percent. According to Dr. Okon Timothy, any nation with this type of variance would fall into the Malthusianism trap, thereby being susceptible to the Malthusian theory catastrophe.

For the avoidance of doubts, some of the conditions given as precedent to remove fuel subsidy by NUPENG and PENGASSAN in the 2000s include:- the removal of transshipment costs, dredging the Atlas Cove, NNPC maintaining its inland receptacles instead of importing finished products and using private depots, tackling the issues of vandalism and crude theft, fixing the refineries, compelling multinationals to refine about 50% of their crude in Nigeria, gradual phasing off of subsidies, the building of new refineries, the provision of social protection programs that should target low and medium-income salary earners and the vulnerable in our society, etc.

The above was repeated in the Vanguard interview. I also canvassed that part of the subsidy funds withdrawn should be used to subsidize agriculture, water, health, education, and public transportation to reduce food costs in low-income families. Besides, I suggested that the government embark on robust renewable and other energy transition programs to tap into Nigeria’s abundant wind and solar energy derivatives.

If, after twenty-four years of democratic dispensation, no government has been able to do those basic things but prefers the rent economy, a subsidy scam that rakes in trillions to line the pockets of the elites and capitalists, I think the time has come for us as a people to “come and let us create a new model for running the oil gas sector, redefining our priorities and a new beginning.

Take it or leave it; with the reasons mentioned earlier, it has become imperative and logical to do away with subsidies for consumption instead of subsidizing production. I said so because when we resisted subsidy removal in the early 2000s, we gave the government certain conditions precedent to removing the subsidy, which I mentioned in the preceding paragraphs. But for almost twenty-three years, successive governments have yet to implement any of those recommendations and are not likely to do so in the nearest future. So, the question is, must we continue in the ocean of dirty subsidy corruption scams and claims that have impoverished Nigerians but would continue to grow the pockets of a few people? Why has the government yet to implement the Petroleum Industry Act (PIA) recommendations for deregulating the oil and gas sector?

The downstream sector is so fragile and less stable than the upstream. We have been unable to shake off the on-and-off petroleum shortages that started in 2021. The banks have not fully stabilized from the Emefiele experiment, and any further dislocation to the downstream operations will likely have a ripple effect on banks, trading, goods, and services. It will likely be a tipping point and a whirlwind that will do us no good. We have twenty-four hours to dialogue and help stabilize the polity. Coercion or using the courts may not help. It will lead to positional bargaining, avoidance, and extreme competition, which would not put food on the table of the masses.

Both parties in negotiation at Aso Rock must find a middle-of-the-road option between the take-home-pay of the minimum wagers that cannot take them home at the end of the month, the poor that would be impacted by the skyrocketing food and transportation costs, and the government that would be spending trillions gulped to swell the pockets of a few individuals with the ‘so-called-subsidy’ at the expense of critical infrastructures to support the masses.

Good faith bargaining can help deflect any bad situation for the good of Nigerians. Nigeria is now or never.

Grace and peace!!!