11 January 2012
THORNY as it may seem, the crisis arising from the surreptitious removal of fuel subsidy by the Federal Government on New Year day, is not beyond solution. It only needs the government to muster the political will to implement them. For this to be done, it is important to go back to basics. The issue of subsidy on locally consumed petroleum products rests on the assumption that there is a shortfall between the cost of import and local selling price but does not address the causes of importation. Indeed, the need to surmount the vagaries of international pricing led government to establish more refineries and supply networks across the country from 1970 onward. The country’s refineries have a processing capacity of 445,000 bpd and the original vision is to satisfy domestic demand, deepen self-reliance and avoid a situation in which oil companies and marketers would enslave the country. This vision worked up to a point in which a group of speculators took over importation of refined products as a result of the massive devaluation of the naira by the Gen. Ibrahim Babangida administration. This happened against the backdrop of low capacity utilisation, bloated overheads, inadequate technology for process upgrade and outright sabotage. These conditions have been entrenched and successive governments have not had the courage to address them.