For the past 28 years or so, virtually every measure trumpeted as a solution to the instability in the supply and pricing of gasoline has turned out to be a gigantic swindle.
The long-running swindle began, like most swindles in Nigeria’s recent history, during the era of the self-designated military president, General Ibrahim Babangida. The country was set to take a loan from the IMF, and as a sop to that latter-day Cerberus, the currency was to be devalued, import restrictions were to be lifted, and anything remotely suggestive of a subsidy was to be abolished immediately.
Gasoline came to be identified as the soft underbelly of the Nigerian economy. It was grossly underpriced, they said, because it was heavily subsidised, with the pernicious result that a gallon of gasoline cost less than a bottle of soda or milk. One image that clings to my memory of that time is of the engaging news correspondent Chris Anyanwu, now a Senator, peddling that line night after night on national television in her smooth, silky delivery.
What subsidy?
The difference between the price of a gallon of gasoline in Lagos and the same gallon of petrol in Fargo, North Dakota, they said.
Wasn’t that what economists call an opportunity cost? If the cost of getting a gallon of gasoline to the pump exceeded the retail price, you could perhaps talk about a subsidy. What were these relative costs? And whatever happened to comparative advantage and all that if Nigerians were to pay for gasoline produced on their soil the same thing as consumers half a world away were paying for it? Was the whole thing not at bottom a tax?
They could provide no coherent answers
Shifting gears, they said gasoline was so cheap that it was being mindlessly wasted.
How? Were Nigerians using it to wash their hands after a meal, or to prepare their vegetable stew in place of regular cooking oil, or as a beverage to entertain their guests, since it was so much cheaper than Coca Cola?
Shifting gears still, they said because gasoline was so cheap in Nigeria, it was being smuggled to neighbouring countries to reap windfall profits.
Now, you could not do that on any meaningful scale by lugging 50-litre petrol cans through bush paths. Only motorised tankers driving on paved roads across international frontiers manned by immigration and customs and security officials had that capability. Those vehicles had to be owned or controlled by political and military officials with guaranteed access to refined petroleum products.
Why was it, then, that not one of those vehicles had been arrested and charged with this illegal traffick, only a few stragglers transporting smuggled gasoline cans in leaky dugout canoes or in rickety trucks across the border?
And why make genuine, honest-to-goodness consumers pay for the sins of syndicated smugglers?
Nor were they yet done.
Gasoline was so cheap, they said, that it was being adulterated. When substituted for kerosene in hurricane lamps and stoves, the adulterated mixture caused horrific explosions that maimed and sometimes killed entire families.
Why not make kerosene cheaper than gasoline, then? In any case, why would anyone adulterate a product that was already obscenely cheap? Whoever heard of adulterated zinc?
From the funds to be realised from a subsidy, the existence of which was never proven, new oil refineries would be built not merely to satisfy growing domestic consumption but also for export, to generate foreign exchange. Those long, snaking lines at filling stations would be things of the past, they said.
Whether framed as “correct pricing” or de-regulation or under any other label, this has been the standard litany, with a few variations here and there, whenever the government has needed to raise revenues during the last three decades.
The more they cut the alleged subsidy, the more remains to be cut. It reminded me of what they said of the whale found beached in Lagos in the early 6os that the more they hacked away at it, the more remained to be hacked.
Gasoline pricing has been the first resort and quite often the only one. The “subsidy” has to be cut or abolished; if not the economy will collapse. Humongous figures are conjured up as revenues that will accrue to the exchequer from cutting the subsidy. Committees are set up to manage the cash inflow and to ensure it is put to the most judicious use, and palliatives to cushion the average person from comprehensive price increases that will follow are announced.
Those measures sprang more from panic than from sound reasoning. Within a year, the “mass transit” buses running on subsidised fares vanish from the roads. A striking project here, thriving scheme there, but much of the money goes the way of other state money — to satisfy the awoofproclivities of officials high and low and their confederates.
The one thing that never gets built is a new refinery.
Rather, the existing refineries are patched up to function fitfully at best, at costs that defy all reason. Periodic Turn-Around Maintenance (TAM) gulps a huge fortune but the only thing that actually turns around is fortune of the contractors and the supervising officials.
When the refineries produce at all, their output is shipped several hundred miles from the loading platform and returned as imported fuel to reap windfall profits in “subsidy” reimbursement for an untouchable criminal syndicate that is even now thriving fantastically.
Organised labour and civil society rouse themselves, wowing that the cuts will not come to pass. The government says there is no going back. The scene is set for a titanic encounter between an irresistible force and an immovable object. Government yields a little ground, and so does organised labour and civil society. A prolonged crisis is averted, but the seed of future conflict continues to germinate, undisturbed, until the subsidy phantom stirs again.
And it did just that last week, in an ambush that President Muhammadu Buhari sprang on the public. Buhari had valiantly resisted all manner of pressures to devalue the Naira, saying it would inflict incalculable pain on the poor. He had vowed to hold oil prices steady for the same reason, and had even cut prices in a surprising departure from the standard practice of his predecessors, and as a demonstration of his good faith.
Then, without warning, without consultation, without provocation and apparently totally unmindful of the consequences, the government announced a more than 80 percent increase in the price of gasoline.
Administration officials say the increase has nothing to do with cutting the alleged subsidy but is being undertaken only as an effort to align the offshore price of the petroleum products, still largely imported, with the official onshore price. Just another step in the “de-regulation” of the downstream sector, they say.
At N145 per litre, the new price, though much higher than the old price of N86.50k per litre, is a bargain compared with the N200 –N300 per litre that desperate consumers were willing to shell out just several weeks ago to obtain gasoline. But nothing had prepared them for the latest increase. Importers and retailers on the other hand have got so used to gouging the public that they are loath to accept the new price regime.
In the end, the government seems to have managed to wrong all parties at once. It will probably wriggle out of this one, but at a high cost in public goodwill. The importers and retailers will regroup and look after themselves.
But this ambuscade is bound, at least in the short term, to vitiate the attentive public’s waning faith in the administration’s credibility, its avowed intentions and its ability to translate them into the beneficent change on which its election campaign was predicated.
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