After forcing through two very tough economic decisions: yanking off fuel subsidy and floating the naira in the forex market, it appears the government is not done yet. Every new day, we keep hearing of tough decisions that the government must take to bring itself out of the hole.
Those who canvassed vigorously that removing fuel subsidy was the silver bullet President Bola Tinubu needed to solve all the economic troubles of the country must be wondering where next to dig fresh holes to fill old ones as things are not adding up. And each time they remind us of how bad things are, all they are saying is that tougher measures are coming. But don’t let them. Remind them that they are responsible and should place more burden on themselves, not on citizens.
The other day, Vice President Kashim Shettima again reminded citizens how bad things are. He told the Committee on Fiscal Policy and Tax Reforms put together to scout for more revenues that the country is in a big mess. He said: “I believe you will come up with a roadmap to salvage our nation, we are in a big mess, but I have confidence in your team. This is a great nation chained by poor governance, chained by many challenges and my principal is a man of courage and conviction…”
Sure, the country is in a big mess. But all politically exposed persons, presidents, governors, ministers and legislators from 1999 till date
should take responsibility for plundering the country and stop threatening citizens with how bad things are.
Just imagine for once, that politicians in the Northeast did not plunge the country into a mindless but avoidable war on insurgency, the resources that are wasted on that flank would have taken care of concrete developmental needs instead of perennially attending to symptoms of the war and perpetually hosting Internally Displaced Persons (IDPs).
Last January, former President Buhari confessed that over $1 billionwas spent under him to partially recover three states (Borno, Yobe andAdamawa) that had been taken over by Boko Haram insurgents. Huge sums were spent under former presidents Umaru Yar’Adua and Goodluck Jonathan. More resources are being expended now in the Northwest, where the insurgency has shifted.
Imagine for once also, that the defence budget is not spread thin to contain terrorism, banditry and insurrection in the North-central, the South-east and oil-bearing Niger Delta, all that resources would have boosted expenditure on health, education and roads.
Add to that how much politicians have stolen to procure luxury lifestyles in and outside the country, paying heavily for medical tourism, buying homes and mansions in London, the UAE and the United States, among other choice locations across the globe.
Let those in government confess their guilt and admit moral burden for digging the economic hole into which Nigeria is plunged. Let the President and his Vice stop threatening citizens with tougher decisions they need to take.
It is tough already and as far as we know in the history of economic reforms, the most painful is the removal of fuel subsidy; the other is the floating of the naira. With those two, citizens’ capacity to move around and transact businesses are curtailed by high costs, and reduced purchasing capacity in a very uncertain business climate. Shouldn’t it be worse than that?
Unveil the Petroleum Industry Act (PIA)
This is the time for the President to unveil the Petroleum Industry Act 2021, the law signed by Buhari to reform oil and gas. That law was not designed to be locked in the closet and it has not been repealed. The former president for whatever reason decided to postpone implementation of a crucial aspect of it till June 2023 when purported subsidy payments would terminate.
Now that President Tinubu has shown uncommon courage to remove fuel subsidy, which is just an aspect of the law, he should go ahead to implement other aspects of the promised industry game changer. Infact, the toughest part of PIA is fuel subsidy removal. Other aspects are governance and transparency issues that a reform-minded government should embrace, unless it has a hidden agenda.
Last week, the National Security Adviser went round to remind stakeholders that 400,000 barrels of crude is still being stolen everyday by criminals and economic saboteurs. He put the value of the stolen crude at $4 million and for 365 days, it is huge and wasteful.
With that sum in the kitty, the Federal Government needn’t panic itself into an Afreximbank $3 billion facility that was announced before the dotted lines were signed, just to create a facade in a chaotic forex market.
In the making of the PIA, it was lamented that over $50 billion worth of investment in oil and gas was lurked out, waiting to be unleashed once the law was passed. That heightened expectations and created a sense of urgency among stakeholders. Delay was not in the best interest of the country, it was thought. The PIA took a while to be put together, passing through nearly all administrations since year 2000.
Now that it is passed, what’s delaying President Tinubu from implementing the law in its entirety? Why limiting implementation to just the renaming and redesignation of the Nigerian National Petroleum Company Limited; without going the whole hug to transform it into available, commercially based and self-sustaining national oil company as provided for in the law?
What about the envisaged changes that will support growth and sustainability in oil and gas, the good governance, competitiveness, global best practices and ease of doing business put in the law to remove uncertainty and encourage investment?
It appears that despite the good intentions of PIA, operators are reluctant to unleash its potentials. If the previous administration was mindful not to hurt the people with fuel subsidy removal, now that the people are already hurt, what else is government waiting for? Let the government explain.
In other oil and gas jurisdictions, the president as political head of government does not have any business cornering the portfolio of oil minister to himself, while pretending to have two ministers of state incharge of gas and petroleum resources respectively.
The PIA does not recognise the balkanization of the Petroleum Resources Ministry among political officers. There is provision for the Commission to regulate the Upstream, while the Authority takes chargeof mid and downstreams. Those two ministers are at best figure heads with no legal authority within the PIA. They may assist administratively in the running of the sector. There is provision for one Minister of Petroleum, who is to be responsible for the determination, formulation and administration of government policy within the industry.
In other oil-producing jurisdictions, political authorities are not allowed to play sensitive roles in oil and gas administration. But in PIA there is a slant that allows the minister to be the driver and owner of industry policies. He is to set the general direction and supervision on behalf of the government; make diplomatic and interventionist roles and be in charge of all upstream licenses -upon recommendation by the Commission.
What we are likely to have, is a breach of the law, where the President pockets the portfolio of oil minister without announcing it and subjecting himself to the governance rules in the Act and to the provisions of the Constitution of the Federal Republic.
The 1999 Constitution (as amended) in Section 138 prevents the president from adding another executive function to that of his Office. In Section 147(2), anyone to be appointed as minister must be cleared in the Senate and sworn in as a minister. Any smart move to circumvent these provisions is pure illegality and must be queried by citizens.
President Obasanjo and Buhari acted in the capacity of ministers of Petroleum Resources outside the PIA. There is no excuse to toe that dubious line because there is a law in place now. It is likely that this was part of the reasons Buhari chickened out of full implementation of the law so that he could micro-manage the industry in his closet.
One other reason the Minister of Petroleum Resources should not operate in the shadows is because of the sensitive powers he wields.
The Act envisages that in the situation of full implementation, the Minister of Petroleum and the Minister of Finance will determine the assets, interests and liabilities to be transferred to NNPCL and whatever is not transferred shall remain with NNPC until government takes ownership.
The fear is that this government may have set up hurdles that will constrain it from fully implementing the PIA. As things stand, there is no minister in place yet to activate the law. And without the full implementation of the law, NNPCL will continue to operate as an agency of government, despite name change. That’s fraudulent.
In the PIA, there is an elaborate provision for Host Community Development, such that a sense of ownership is guaranteed for industry assets and facilities that crisscross oil bearing communities.
The Act provides for the establishment of a governance structure to carry out needs assessment and community development plans.
This will be funded through a percentage of OPEX of the preceding year, maybe three or five percent. The project selection will be done by the host community. I hope that by now government has started calculating what it will pay host communities in 2024 from 2023 OPEX.
Hopefully in that arrangement, there may be no need for private armies collecting billions for so-called contracts to secure industry assets. If there is a need for their services, the communities will engage them. A president in far-away Abuja will not need unvetted armies to help secure oil assets. Everybody will be involved.
That is the tough decision on the table. It shouldn’t hurt our courageous president to take
