It is something of a paradox, but the current fuel scarcity and the myriad adverse externalities it is supporting present a unique chance to re-write the terms of our domestic transactions from first principles. Crucially, the new dynamics should favour more open, more involved (laterally and horizontally) and hence, more accountable processes. Better still, it is open to debate whether we could have a more propitious commencement for a change in policy direction as we usher in a new government, whose campaign platform was defined by the “change” mantra.
The finer points of the causes of the scarcity are increasingly unimportant. What does it matter if our filling stations are empty because fuel marketers are not bringing in new consignments until the arrears on previous transactions are met? The size of these arrears is not insignificant, in the light of our failing public finances. But is it N200bn, as claimed by the marketers? Or N156bn, as government claims?
Even the fact that accounting in the oil and gas sector in Nigeria remains one of the more opaque of such practices globally is increasingly not a significant consideration. For even if the Jonathan administration were to meet the marketers at their point of need — wherever this is — the fuel scarcity would not abate. Until, that is, fuel marketers have a sense of the fiscal arrangements that the incoming Buhari administration would favour.
On this argument, the easiest cop-out would be to promise the oil marketers that nothing in the current (obviously lucrative) fiscal arrangements would change under the new administration. Credibility, though, would then be a problem (for the new administration, that is). For we all know that the 2015 budget appropriations as passed by the National Assembly did not include provisions for the “subsidies” around which imports of fuel into this country has thrived over the course of the Jonathan administration.
So, if we concede that the Buhari administration would have to look harder at the budget provisions, and thereafter design a supplementary fiscal arrangement consistent with its interpretation of the challenges confronting the nation, chances are that the emerging budget would be a less accommodative one. The budget revenue short-fall this year (as a result of poor crude oil prices and production, and depending on whom you talk to) have been put at anything between US$65bn and US$42bn. For perspective, we earned around US$82bn last year, with oil averaging US$106bn per barrel up until mid-June.
Conversely, we have this huge (and apparently sticky, going down) domestic cost structure, which on current form speaks to continuing labour relations difficulties over the next twelve months at federal, provincial and municipal levels. Add to this the slow-motion revelations of the Coordinating Minister for the Economy on the fraught fiscal state this space is in, especially from the debts built up to pay salaries, and the options before the Buhari administration are far from sanguine.
The oil marketers know this. The majority of our people can sense it. So why not liberalise the domestic market for imported fuels? Why not remove the cap at which any one who imports fuel into the country can sell it, so long as quality standards are not compromised in the process? As it is we have been buying at prices far above the recommended retail price of a litre of premium motor spirit, since this current scarcity kicked in.
Arguably, the “poor and the vulnerable” will be hard hit. But in assessing the measure of their vulnerability, it helps to remind pro-poor advocates that the last government-ordered decrease in the pump-gate price of petrol, from N97 per litre to N87/litre was entirely appropriated by car-owning Nigerians. I know of nowhere in the country where commuters’ travel fares went down on account of this price drop.
The markets’ response to the resulting price increase, were the downstream sector of the oil and gas industry to be fully deregulated, including commuters resorting to walking relatively longer distances should help importers of finished petroleum products design models based on what the market would take — provided government undertakes to frustrate efforts by would-be importing “cartels” to stitch up the market for the respective products.
On this understanding, the task before the Buhari administration would then be simply one of finding market solutions to the different problems bequeathed it by the incumbent, especially by removing barriers to entry and exit across the economy’s different sectors — even for cement and rice!