A Strategic Fund to replace N5000 ‘salaka’ official deception

Sunny Nwachukwu, PhD, a pure and applied chemist with an MBA in management, is an Onitsha based industrialist, a fellow of ICCON, and vice president, finance, Onitsha Chamber of Commerce. He can be reached on +234 803 318 2105 (text only) or schubltd@yahoo.com

THE FEDERAL GOV ERNMENT has planned a N5,000 palliative for 40 million poor and vulnerable Nigerians. That arrangement amounts to a wasteful and vision-less expenditure to the tune of N2.4 trillion in one year. And this arrangement is being claimed by the nation’s economic managers as a strategy that will cushion the impact of inflationary pressures to be occasioned by the removal of petroleum subsidy and the introduction of total deregulation in the downstream oil subsector that could lead to an all time high PMS pump price of N340/ litre.

This plan is a very unpopular one and most unacceptable. This decision, already taken by the economic drivers, lacks merit because the flawed logic and baseless reasoning behind comparative pricing of the said refined product in other countries does not apply similar operational economic factors in their different economic environments. The idea could prevent the forces of demand and supply from determining market trends with imports not being allowed to compete with local supply, and to thus, hopefully, bring about a truly competitive pricing regime (once local refining is put in place).

Our situation is the way it is because we operate in a failed state, where good governance is scarcely within reach because Nigeria’s systems are dysfunctional. Corruption has become an incurable malignant cancer in the economy. In public service, there are fewer people that are honest with regards to funds released as budgeted, which the end users sometimes divert. So, how will the economy make progress? The case of Nigeria is totally and completely different because Nigeria has been the largest exporter of the said raw material (crude oil) in Africa. Based on the facts on ground, a sustainable strategy could only be found at this precarious time and situation, in an aggressive engagement mode, for all available functional local refining facilities in the country’s oil industry. Good enough, the nation now has a log of 23 valid refinery project/active licenses issued early this 2021 by the Department of Petroleum Resources (DPR). Their total sum of daily refining capacity is 1,090,000 barrels of crude oil. The PMS yield, if the 23 DPR approved facilities are effectively and efficiently utilised daily, come January 2022, will surpass our real and actual daily demands of about 38.2 million litres of PMS; and still keep an excess figure of the same product for export (making Nigeria a net exporter of PMS).

My take is that these local refining facilities should be aggressively empowered as a matter of urgency! It is around them that the so-called notoriously used language (‘petroleum subsidy’ for local refining) can be meaningfully lavished and applied, to make a meaning.

An internalised subsidisation of raw material/crude oil amounts to financial conservation within the same economy, yet promoting productivity/GDP growth, and good/ great success for the economy! This. in the real sense, will force down the pump price (through healthy competition amongst the local refiners) to a ridiculously and unimaginable low rate, even as low as N95/litre to about N120/ litre (all things being equal); from the present price of N165! Yet, the local refiners will be smiling to the bank with fat net profit (if they are encouraged/empowered by the federal government, with specially designed, subsidized rates in our local currency for crude oil supplies, that would still not interfere with the nation’s annual budget oil benchmark). Yes, it is doable! It is bankable! The ‘Strategic Intervention Fund,’ and not the N5,000 palliative for 40 million poor Nigerians.

The nation’s current annual budget benchmark (price of crude oil) ought to be our pathfinder towards the very challenging economic recovery and the national wealth management emancipation from moral enslavement, identified as deeply rooted in corrupt practices, perpetrated by those in charge of midwifing national economic growth and development. The historical fact remains that the wealth of the nation cannot be overlooked, since it is directly tied to the significant contributions made by the oil sector to foreign exchange earnings through the exports of crude oil and gas resources to our international trading partners, over the past decades (the nation’s near-zero refining capacity, notwithstanding).

It’s very simple to extricate the gloomy economy (high inflation and highly devalued local currency exchange rate) from the present economic downturn; although it appears that we have been caught in the web of a time-bound solutions management of our critical and desperate situation (we wilfully created and caused this by ourselves, this self-inflicting economic pains). Let us all team up and grow the economy rather than tearing it down, due to our personal desires and selfishness, against the interest of the state.

The feasible solution lies in taking the following steps aggressively and implemented: 1. Declare a state of emergency in the downstream oil subsector.

2. Engage all functional local refining facilities (Dangote Petrochemicals Refinery and the other 22 privately owned modular refineries) with a Strategic Intervention Fund (SIF) scheme, instead of the wasteful N2.4 trillion ‘salaka’ that can never be accounted for, and has no achievable target.

3. Seriously pursue the rehabilitation projects on the four federal government owned 445,000 bpd refining capacity to be completed as scheduled, without any delay or hitch.

4. Encourage, train/develop the skills and human capacity; and promote the artisanal refining technique in the creeks of the Niger Delta region, to be formally registered and operate with the globally accepted best practices and standard procedures (void of environmental pollution and degradation).

5. Create a specially designed/ subsidized supply rate of crude oil for all the government approved local refiners, while still maintaining the budget oil benchmark but, the bullish international oil market forces notwithstanding.

These and more are steps this economy needs to take to tackle the present economic challenges facing the citizenry.