Why not ask why there’s still subsidy when the crude price is hovering around $34/barrel? So low a price yet we are still talking of subsidy?
If you heard the minister of state for petroleum and NNPC GMD very well, he said that they would restore the 97 naira/litre price of petrol in January. He was even insinuating that the era of subsidy would be gone soon if Government continues to spend so much money on petroleum distribution..
If you have been following the write-ups on this blog, you would find out that we have been singing it like a song that the problem of the fuel wahala has always been money. It is money because the fuel marketers never had money in the first place to start the business. The business came out of the fact that the refineries were “living-dead” and people have to fill the vacuum. The same people who doomed the refineries now created the monsters called fuel importers (AKA petroleum marketers). They provided the fuel importers the pact to get funds from the banks and bingo the business blossomed to high heavens.
The economic conditions on ground were never envisaged by the marketers. The marketers never knew that a time would come when they would be told to use their personal money to fund their business. The marketers have always been used to collecting hefty loans from banks to fund the so-called importation. They always choose the banks to go, they know the banks with good concentration of government funds(or deposits). Ofcourse their contacts(or fronts) in government or NNPC circles would have informed them of the appropriate banks to go . Once they get the money, it is bingo!! They buy the fuel, and with government help, they make their money. That has been the business. A business model that is peculiar to Nigeria and Nigeria alone.
However, when this government came in, the marketers couldn’t lay their hands on the funds as usual. Government income has fallen due to oil price “dramatic and debilitating” drop. This necessitated the tightening of monetary controls which has affected the banks. The banks can no longer “dash” money as usual. This is the problem as we speak.
That is the reason you will always hear of fuel subsidy. Ask yourself why subsidy when crude oil price is around $34/barrel? Why would anyone be talking of fuel subsidy when the price is that low? The answer is simple: Government cannot just say we want to “help” the marketers with funds. Government would “enclose everything” under fuel subsidy payments. However, the marketers would continue to come for more because that wasn’t the business model. The business model has always been to use government money to fund private businesses.
As we speak, government has been importing fuel since marketers don’t have money. This policy might need to continue for the time being. Also the refineries might need to be sold(in an open and transparent manner) to people who can turn them around and run them for optimum output. You cannot leave the refineries to NNPC people. It wouldn’t work I tell you..
Marketers would then have to be vetted for thorough competence in financial resources if they are interested in the business. For now, many of the marketers are just job-men looking for how to enter the “national vault”. They need to be weeded out for serious ones to come in. What we need in this issue is sincerity.
This is the scenario….Ewolewoo!!