By Kingsley Omose
I am also not writing on how a crude oil producing nation has attained the undistinguished dishonor of also being one of the highest importers of petroleum products for which $7.5 billion trillion of its foreign reserves or N1.2 trillion is spent, while its local refineries are left in dilapidated state and its public infrastructure is 19th century in outlook.
Neither am I losing any sleep at the belated wakeup efforts by the Presidency and the National Assembly to address the fuel subsidy tragedy simply because crude oil prices are falling and foreign exchange reserves are dwindling, making it increasingly suicidal for us to continue with a subsidy system that is benefiting the fuel subsidy cartel.
Unlike Senator Bukola Saraki, I am not perturbed that an additional N800 billion will be spent on fuel subsidy by December 2011, beyond the sum of N240 billion appropriated in the 2011 budget, and that
payments on fuel subsidy are treated as first line charge, meaning that all other expenditures including Capital Expenditure and distribution to States and local councils is secondary.
Even NNPC’s claims that it also sells the 400,000 barrels of crude oil otherwise allocated for refining by our epileptic refineries and then pumps the proceeds into subsidizing the fuel imported at N130 a liter but sold at N40 to marketers who sell to motorists at N65 a liter leaves me wondering who is fooling who, but I am not moved.
I am not even going to ask what is stupidly obvious, why the Federal Government continues to allocate 400, 000 barrels of crude oil to NNPC for local refining when we all know that these refineries are not going to utilize these allocations, and as if it would not be much easier for the allocation to be sold and appropriated as required byour constitution.
I simply want to demystify how the fuel subsidy works and to help shine the light on what is turning out to be a worse financial disaster and international embarrassment for Nigeria than the infamous “Cement Armada” of the 1970s, so that we do not have to waste more millions of Naira on a judicial inquiry to unravel what is otherwise a straight forward issue.
Emeka Okafor in his blog, Africa Unchained described the Cement Armada as follows: The Belgore Inquiry investigated the “Cement Armada”. The Gowon government had imported sixteen million metric tons of cement at a cost of N557 million. Millions of Naira was lost in demurrage charges, as the cement rotted in the seas outside of Lagos.
The ports were too congested to enable ships off-load their cargoes. The inquiry noted that the Ministry of Defence needed only 2.9 million tons of cement at a cost of N52million. The orders were inflated for
private profit at great cost to the government.”
So I have taken the pains to break the fuel subsidy process into ten easy to understand stages, and while I do not claim that these stages paint the full length and breadth of a massive chopping spree, that
exposes all the ‘Nungus or Koros’ to borrow from my Hausa and Yourba friends, they at least provide a basis for intelligent discourse by the uninformed on the issue.
First, positioned offshore Republic of Benin are huge super tankers fully laden with petroleum products. Since Nigeria does not have berthing facilities at Atlas Cove, Yinka Folawiyo Jetty and the other
private jetties for the discharge of petroleum products by these super tankers, smaller vessels are required for literage purposes to fill the gap.
Second, from across the world owners and charterers of these smaller vessels come to Nigeria looking for Nigerian sponsors to get their vessels chartered by relevant government agencies to be able to lift
petroleum products from the super tankers for discharge at Atlas Cove and other private jetties in Lagos.
Third, the relevant government agencies go through the ritual of allocating licenses to selected Nigerian companies to import petroleum products from different parts of the world, who simply turn around to
source the allocations from the super tankers offshore Republic of Benin while the government pays for the same cargoes as if they were imported from the Far East.
Four, more vessels are discharging petroleum products at Atlas Cove and the other private jetties in Lagos than we have capacity to handle, and because these vessels are on time charter contracts, the government has to pay demurrage for days, weeks or months until these vessels can discharge their petroleum cargoes.
Five, typically more petroleum products are imported by the Federal Government than it has storage facilities for at Atlas Cove, so the Yinka Folawiyos, Capital Oil and the other companies with jetties and
storage facilities on the Apapa-Oshodi axis step in for a fee to bail out the government and take deliveries of these petroleum cargoes.
Six, stupidly government agencies like the Nigeria Customs collect duties on the imported petroleum products, while the Nigeria Ports Authority also collect port charges and dues from these vessels discharging petroleum products including a throughput fee for the quantity of petroleum products piped from the vessel at the jetties to the storage facilities.
Seven, the owners of the storage facilities also charge government rent for storing the petroleum products for days, weeks or months and a throughput fee as the petroleum products are being pumped from the
storage tanks to the ubiquitous petroleum tankers that come in their thousands to Lagos to lift petroleum products for distribution across Nigeria.
Eight, for every two petrol tankers that lift petroleum products from the various storage facilities in Lagos for delivery to petrol stations across towns and cities in Nigeria, only one gets to its destination as bad roads, products diversion, products adulteration, and the activities of petroleum products smugglers using porous
borders across Nigeria collect the other tanker.
Nine, beat this, very few petrol stations across Nigeria have properly calibrated dispensing pumps, meaning that when you pull up in a petrol station to top up or fill your car's tank, chances are very high that you are being flexed as the fuel actually dispensed into the fuel tank will be less than what is being displayed in the cash and liter meter of the pump.
Ten, the quality of petroleum products imported into Nigeria are of very low although usable grade, and overtime contribute to engine wear and tear, but there you have set out before you the N1.2 trillion annual fuel subsidy rituals that has in the last 10 or more years made stupendous wealth for the fuel subsidy cartel and its friends.
The advice I have for my fellow Nigerians especially organized labour on the issue of removal of fuel subsidy is this: when thieves begin to cry out that they need help in being stopped from continuing to loot and plunder the commonwealth, which they ordinarily have unrestrained access to, it will be unwise not to heed their cry.
A word they say is enough for the wise.
borders across Nigeria collect the other tanker.
Nine, beat this, very few petrol stations across Nigeria have properly calibrated dispensing pumps, meaning that when you pull up in a petrol station to top up or fill your car's tank, chances are very high that you are being flexed as the fuel actually dispensed into the fuel tank will be less than what is being displayed in the cash and liter meter of the pump.
Ten, the quality of petroleum products imported into Nigeria are of very low although usable grade, and overtime contribute to engine wear and tear, but there you have set out before you the N1.2 trillion annual fuel subsidy rituals that has in the last 10 or more years made stupendous wealth for the fuel subsidy cartel and its friends.
The advice I have for my fellow Nigerians especially organized labour on the issue of removal of fuel subsidy is this: when thieves begin to cry out that they need help in being stopped from continuing to loot and plunder the commonwealth, which they ordinarily have unrestrained access to, it will be unwise not to heed their cry.
A word they say is enough for the wise.
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