The Fuel Subsidy Conundrum (Part II) – Chido Onumah

Published:30 Nov, 2012

The Fuel Subsidy Conundrum (Part II) – Chido Onumah

I ended the first part of this piece last week by asking on whose side President Goodluck Jonathan was on the fuel subsidy debacle: the Nigerian masses or his oil-marketers friends? I had barely finished sending out the piece when I read the troubling headline in The PUNCH, “Unpaid subsidy: Diezani, NNPC report Okonjo-Iweala to Jonathan”. I shall return to the sordid details of what is gradually turning into an albatross around the president’s neck.

Two weeks ago, President Jonathan had said that: “Total fuel subsidy removal is a must”. A few days after that statement, he reversed himself, when he was reported to have said, “Subsidy stays in 2013,” while remaining silent about the prospect of an increase in the price of petrol. There are lots of issues arising from the fuel subsidy imbroglio and there is no better place to start than the President’s own argument.

The thrust of President Jonathan’s argument is that we need to attract investors to the oil sector and the only way to do it is for government to end the so-called subsidy and privatise our refineries before they can become functional. Of course, the President’s argument falls flat in the light of current reality. As one commentator noted, “It is not the removal of subsidy on petroleum products that will attract investors to the oil sector; it is the government having zero tolerance for corruption, fraud, waste and abuse; prosecuting and jailing anyone found guilty of any crime”.

There is very little to add here, except to note that it is not enough for the government to wish for investors; it has to create the enabling environment for investments to thrive. In the last one week, Nigeria has moved from the most fraudulent country in Africa to the worst place for a baby to be born. KPMG, the global audit and financial advisory firm, recently rated Nigeria as “the most fraudulent country in Africa, with the cost of fraud during the first half of 2012 estimated at N225bn ($1.5bn). According to reports, the firm’s Africa Fraud Barometer, instituted this year, measures fraud on the continent and assesses the fraud risk that confronts companies (emphasis mine) in their operations. A few days before that not-too-shocking revelation, it was reported that “Nigeria came last of 80 countries researched in a recent study by the Economist Intelligence Unit, as the worst place for a baby born in 2013”.

Do we really need these meddlers to define us? We know Nigeria is one of the worst places on earth to do business. As the Halliburton bribery scandal revealed, even our leaders are not left out of official bribery and the wheeling and dealing when it comes to doing business in the country. So, what investors are we really hoping to attract under the prevailing business environment?

The President referenced Canada as having 16 functional refineries because they are privately owned. It appears when it is convenient for our rulers they make reference to other countries. While the President was on the issue of Canada, he should have talked about Canada’s public health system which provides near universal coverage to all Canadians and is a reference point around the world. He should have also mentioned Canada’s infrastructural advances, social security system, and the fact that working parents are entitled to a  full year of maternity leave. Perhaps, the President needs to be informed that at the height of the US invasion of Iraq after the 9/11 terror attacks, Canadian taxpayers received bonus cheques from their government because the country earned extra oil revenue from the rise of oil prices occasioned by the 2003 invasion.

Let’s forget the Canadian diversion for a minute and come back to our own reality. The President says our refineries are struggling to refine at 30 per cent of installed capacity because they are publicly owned. Since we can’t manage our refineries, the way out is to sell them off. But, if there is one thing that has failed woefully in more than five decades of independence, it is the Presidency.  I have yet to hear our rulers make a case for outsourcing the Presidency.

There are four African countries, including Nigeria, that are members of the Organisation of Petroleum Exporting Countries. Almost all the refineries in these countries are state-owned. Algeria has five refineries. One is run by the China National Petroleum Corporation, while four are run by Sonatrach, a state-owned company. Angola has two. One is run by Chevron Corporation, while the other run by Sonangol Group is state-owned.  Libya has five refineries. All five are state-owned. Three are run by the National Oil Corporation while the other two are run by the Arabian Gulf Oil Company.

It seems that the corruption which permeates the oil industry for which some people are making the asinine argument for the privatisation of our refineries is the issue here. Just last week, The Nation newspaper reported of “disquiet in the Presidency over a ‘close’ relationship between a serving minister and Pinnacle Contractors Limited, an unregistered  firm, which was indicted for N2.7bn ($18m) phony oil subsidy deals”.

Before this latest revelation, we had been alerted on how subsidy claims shot up from N300bn ($2bn) to N2.3tn ($15bn) under President Jonathan. Many of the culprits in that unprecedented pillage are currently trying to plea-bargain their way out of jail. That corruption has rendered the oil sector comatose shouldn’t, for any reason, be a case against public sector-driven oil industry.

But it is not just corruption that has dogged the oil sector and the subsidy business. The confusion and incompetence is mind-boggling. On November 22, The PUNCH reported that “the Nigerian National Petroleum Corporation had alerted President Jonathan  to  a looming acute  fuel shortage  if the Federal Government failed to pay N1.13trn ($7.5 billion) subsidy  owed it (NNPC). “The NNPC top management, led by the Minister of Petroleum Resources, Diezani Alison-Madueke, and the corporation’s Group Managing Director, Mr. Andrew Yakubu, reportedly made this known to Jonathan at a recent meeting,” the newspaper said, adding that the team told the President  that  the Minister of Finance, Mrs. Ngozi Okonjo-Iweala,  had  failed to pay the  debt. Alison-Madueke and her cash cow, the NNPC, hinged their “capacity to continue the importation of fuel on the payment of the debt which had accumulated over the months”.

Interestingly, three days later, on November 25, The Guardian reported that “the FG is apparently set to recover about N1.3tn ($8.6bn) owed it by the NNPC and other multinational oil companies”. The newspaper quoted the President at the retreat for new members of the NEITI Board as saying the recovery task team would comprise high-ranking government officials as well as government agencies that are saddled with either the responsibility of collecting or managing Nigeria’s oil and gas revenue. If you are confused, so am I!

So, what really is the subsidy argument? The government’s position which is self-indicting is that the country cannot refine enough petrol for local consumption because our refineries are not functional. The government has to export crude oil and import refined petroleum products. In an attempt to address the problem, the government set up the Kalu Idika Kalu led National Refineries Special Task Force.

The committee’s report says that Nigeria, with Africa’s third largest refining capacity with its 445,000 barrel per day installed capacity, has only 18 per cent capacity utilisation and efficiency. This contradicts President Jonathan’s claim that the country’s refineries are operating at 30 per cent of installed capacity. What really is the exact figure? According to the committee, Egypt (Africa’s largest refiner of petroleum) with 774,900bd capacity has 81 per cent efficiency level.

It is heartwarming that civil society has fired the warning shots against any increase in the price of petrol as we head into the first anniversary of the Occupy Nigeria protests. President Jonathan has a choice: either to allow dubious private businessmen hold him hostage or govern in the interest of the people.


– Chido Onumah (

Related Posts

Recent Posts

Bauchi SSG, Ahmed Sulieman, emerges new Emir of Misau

Secretary to Bauchi State Government, Alhaji Ahmed Suleiman, has emerged the new First Class Emir of Misau in Bauchi State.   His appointment is contained in a statement issued on Thursday by the Permanent Secretary in charge of Political Affairs, Government House, Bauchi, Malam Hashimu Yakubu, and made available to the News Agency of Nigeria (NAN) “Following the death of the 10th Emir of Misau, Alhaji Muhammadu Manga III on Monday, 17th Aug. 2015, and pursuant to the powers conferred on him...

NUC releases list of 65 illegal universities in Nigeria

The National Universities Commission has released a list of illegal degree awarding institutions operating in Nigeria.   The list of these illegal universities was made available to the public in a NUC’s weekly bulletin dated August 24.   In the bulletin, the NUC Executive secretary, Julius Okojie, warned that Certificates obtained from these universities and colleges will not be recognized for the purpose of NYSC, employment and further studies.”     Full list:   1. University of Accountancy and Management Studies, operating anywhere in Nigeria. 2. Christians of Charity...

Buhari Appoints SSG, Chief Of Staff, Others

President Muhammadu Buhari has approved the following appointments: Engr. Babachir David Lawal – Secretary to the Government of the Federation Alhaji Abba Kyari – Chief of Staff to the President Col. Hameed Ibrahim Ali (rtd.) – Comptroller-General, Nigerian Customs Service Mr. Kure Martin Abeshi – Comptroller-General, Nigerian Immigration Service Senator Ita S.J. Enang – SSA to the President on National Assembly Matters (Senate) Hon. Suleiman A. Kawu – SSA to the President on National Assembly Matters (House of Representatives) The appointments are with effect...

President Buhari’s New Appointments; Secretary to the Federal Government, Chief of Staff, Others named

Col Hameed Ali (RTD) has been appointed as Comptroller General Customs by President Buhari. Babachir David Lawal has been appointed as Secretary to The Federal Government. Abba Kyari is President Buhari's Chief of Staff. Kure Martin Abeshi has been appointed as replacement for Comptroller General of Nigerian Immigration Service. Senator Ita Enang is appointed as Senior Special Assistant to President Buhari on National Assembly Matters (Senate). Suleiman Kawu is appointed Senior Special Assistant on National Assembly matters (House of Reps). Other appointments to...

@Allsocks_: Six Beneficial Reasons Why You Should Wear Socks

Wearing socks provides many benefits despite that socks remains an item of clothing that is most times neglected because it’s not mostly visible. Some of the importance of wearing socks includes; Socks are very useful for absorbing the sweat produced by the feet. Without wearing socks, sweat from the feet will be absorbed by the skin and the shoe, this will produce a very offensive odur which can be equally embarrassing. So when you wear socks you prevent your shoe...

Usain Bolt Grabs 10th Gold At World Championships

Usain Bolt put his sprinting supremacy beyond doubt. With one of his coasting-at-the-end performances in the 200 meters on Thursday, Justin Gatlin still couldn't get close as the Jamaican won a record 10th gold medal at the world championships. Looking left and failing to see any red from Gatlin's jersey, Bolt lifted both arms and punched his thumbs into his chest to show once again he is the greatest sprinter of all time.

APC Governors Meet In Adamawa

APC governors, otherwise referred to as the Progressive Governors Forum have arrived Yola, the capital of Adamawa State, as part of their monthly meetings which rotated among  the 22 APC States. The Governors arrived at the Government House on Thursday and were ushered into the Government House chambers by the host Governor, Senator Mohammed Umaru Jibrilla. Governor Jibrilla described the meeting as the first in the State in the history of his administration and prayed...

Fake Doctors: MDCN To Verify Doctors Employed By FG

After the discovery of a fake doc­tor, Martins Ugwu, who worked in the Federal Ministry of Health for nine years, using the cer­tificates of his friend, Dr. Davidson Daniel George, the Medical and Den­tal Council of Nigeria (MDCN) has commenced verification of all doctors employed by the Federal Government. Registrar of the MDCN, Dr. Abdulmunin Ibrahim, said in an exclusive in­terview in Abuja, that the detec­tion of Ugwu, who rose to become the chairman of Nigerian Medical...

New SSG Appointed

Governor Mohammed Abubakar of Bauchi State, has approved the appointment of Alhaji Bello Illelah as the new Secretary to the State Government. His appointment is contained in a statement issued in Bauchi on Thursday by the Permanent Secretary , Special Services, Malam Abdu Aliyu. Until his recent appointment, Illelah was the Special Adviser to the State Governor on Civil Service Matters. He had in the...

Buhari, Kukah Meet At Aso Rock

President Muhammadu Buhari on Thursday met briefly with the Catholic Bishop of Sokoto, Mathew Kukah at the Presidential Villa, Abuja. Kukah, who was part of the National Peace Committee delegation that visited the President earlier this month, is believed to be against the government’s move to probe corrupt ex-public officials. He resisted attempts by State House correspondents to question him on mission to the seat of power. Kukah, who was almost running from the...

Pirates Attack Boat, Abduct 3 In Bayelsa

Unidentified gunmen suspected to be sea pirates on Wednesday, attacked two passenger boats and kidnapped three persons along the Ogbia to Brass waterways in Bayelsa. Asinim Butswat, Police Spokesman for Bayelsa Command, confirmed the development on Thursday but said that details were still sketchy, “I am waiting for details.”, Butswat said. It was learnt that the abducted victims were two Okpoama community Chiefs, identified as Chief Blessing Wagio and Chief Isaac Akono-Igolo, as well as...

57 Illegal Universities In Nigeria, See Full List

The National Universities Commission recently released a list of illegal degree awarding institutions operating in Nigeria. The NUC Executive secretary, Julius Okojie, warned that those who patronise the schools, do so at their own risk. “Certificates obtained from these sources will not be recognized for the purpose of NYSC, employment and further studies,” the NUC said. 1. University of Accountancy and Management Studies, operating anywhere in Nigeria. 2. Christians of Charity American University of Science...

Arase Moves To Remove Lamorde As EFCC Chair- Report

The Inspector General of Police, Solomon Arase, has written to the Economic and Financial Crimes Commission indicating his plan to recall all police officers who have so far served in the commission for five years, authoritative sources at the police headquarters in Abuja say. In a letter, with reference number CB/33/80/IGP.SEC/Abj/Vol.52/60, and dated July 14, 2015, Mr. Arase directed the EFCC to compile a list of all officers in the category, and forward to his office...

World Bank Disburses $140m For Community Development In Nigeria

The World Bank yesterday said it was ready to commence disbursement of an additional sum of $140 million (about N30 billion) to 26 states of the federation and the Federal Capital Territory (FCT) to boost community projects in Nigeria. Already, the sum of $200 million had been disbursed in the first phase of the project. The project had disbursed US$ 200 million from 2009 to 2014 in the first phase of the Bank's Community and Social Development...

Lady Gaga Covered In Blood On EW Magazine Cover

Following those paparazzi shots of her shooting American Horror Story: Hotel in a magenta evening gown, Entertainment Weekly has an official look at Lady Gaga as the Countess on the cover of the new issue. She's wearing what appears to be a white silk dressing gown as well as that creepy glove with attached fingernail.

Justin Bieber Look-alike Toby Sheldon Broke Up With Boyfriend Before Death

Toby Sheldon who became famous for spending more than $100k to look like Justin Bieber has been found dead. Toby's body was found in a Motel 6 in the San Fernando Valley on August 21. He has been reported missing since August 18. Law enforcement say police found drugs in the room but it's unclear how he died. When Toby went missing, the LAPD said the disappearance may have been triggered by a breakup...

Akwa Ibom Tribunal; Who is really on the hot seat? #AkwaIbom

Day 61 of the Akwa Ibom Governorship Election Tribunal and the court was inundated with evidence namely INEC's election materials which included voters register, Forms EC8A and Forms EC8B. It took over 2 hours to bring in the truckload of files and the Respondents had to request for 1.5 hours break at the sight of the mountain of evidence. So the cross-examination did not begin until 4pm. The petitioners’ team led by Chief Wole Olanipekun SAN, is leaving...

Gay Man Proposes To His Boyfriend In Church, Congregation Reacts (WATCH VIDEO)

Trevor Harper is said to have been dating Davis, his boyfriend, for nine years. He proposed to him in church while members of the church and his pastor gave him a standing ovation when he got down on one knee. Credit: cosmopolitan

Amber Rose Dumps Bald Look? See Her Long Hair With Bangs

Amber Rose shares this photo of herself wearing long hair with bangs and it got us wondering if she is considering a hairy situation. Which of the Amber Rose do you prefer? The bald Amber or the long haired Amber?

Prof. Ropo Sekoni: Who Is Afraid of a Female INEC Chair?

Even as an acting chair of the Independent National Electoral Commission (INEC), Mrs. Amina B. Zakari has gotten more than her fair share of bashing, particularly from the political party under which she was invited to serve as commissioner for over four years. From the caustic character of the opposition to the current acting chair of INEC, particularly by spokespersons for the PDP and other surrogates, it is clear that the opposition to the Kazaure woman may...

Watch Taylor Swift Sing “All of Me” With John Legend

For her "1989" date in Los Angeles, Taylor Swift brought out John Legend for a duet on his emotional ballad "All of Me." Credit: cosmopolitan