On Deregulation, Transformation and the Nigerian Nation

Tonight, Nigeria’s President, Dr. Goodluck Ebele Jonathan, GCFR, attempted – again (as has now become his daily duty) – to convince Nigerians to buy into his sudden realisation of Nigeria’s pending doom because of fuel subsidies. At best, the president comes across as a man selling a product he’s bent on forcing down the throat of citizens, and I’m sure he already knows that the government does not have the permission of the majority to go ahead. We’ve been here before, the numbers don’t look right and the “transformation team” is working towards the laziest answer to Nigeria’s socio-economic sustainability. The more Abuja says, the more it exposes the fundamental weakness of the self-taught remove-subsidy-and-transform-Nigeria argument.

What is going on in Nigeria today was aptly described by Prof. Chinua Achebe in his popular book, “The Trouble with Nigeria,” where he said that “The Nigerian problem is the unwillingness of its leaders to rise to the challenge of personal example…” As much as Abuja talks about transforming Nigeria, it all ends as dropped words because the actions of the current administration have not shown any difference from those of the occupiers of our political space who simply feed fat on our ignorance, apathy and resilience. How does a government that preaches sacrifice budget N2.5 million (over $15,000) for its daily feeding? Cassava bread, which the president promised to feed on until his exit in 2015, must be very expensive.

This government is afraid of doing the needful! At various events, and even during the Presidential Media Chat, the president and government officials confess to the existence of chronic corruption in the management of fuel subsidies. However, when asked about bringing the culprits to book, the quick (often shaky) response is that “there is no cabal, really, they are just business people”. The president even went as far as comparing fuel marketers to MTN, and that is a new argument that “Team Transformation” is trying out. Mr. President, please don’t compare telecommunications deregulation with the plans in the Oil & Gas sector. And I will explain. At the time when Nigeria moved towards complete deregulation of telecommunications in Nigeria, the situation was so bad that most people didn’t even know the joy of telecommunications. Only 450,000 (way less than 1%) relied on the services, so the 99% only saw benefits after the complete deregulation. That was well-timed and contextual, and it is not the same with a product that determines the cost of livelihood for 99% of the population.

Abuja has also argued that aviation was terrible before deregulation. Again, I ask: what percentage of Nigerians relied on Nigerian Airways for their travel from, say, Lagos to Benin? I’ve also heard the argument that Nigerians accepted the deregulation in the power sector, so they should embrace fuel subsidy removal as part of the deregulation requirements for the Oil & Gas sector. The same telecom/aviation principle applies here: Nigerians knew no power before now, and basically provided their own alternatives, so not many people will protest attempts to reform and make it better. It is not the same for the fuel subsidy debate, so please search your books for another argument. Wise counsel has been given by the likes of EnoughisEnough Nigeria, Prof. Pat Utomi and others: cut the cost of government first, and show Nigerians that you are a responsible government, instead of asking us to sacrifice based on the number of banquets you host to force an idea down our throats.

The sustainability of Nigeria, which the president often speaks of, is NOT even a conversation about fuel subsidy removal; it is a wholesome conversation about the welfare of citizens, cost of government and the quality of governance. At the heart of the ongoing debate is an ongoing show of disrespect for the feedback from citizens. When the president makes statements such as, “there’s no going back on subsidy removal,” what is the point in asking the Coordinating Minister for the Economy to keep saying that the president is still discussing with Nigerians and he will make up his mind based on feedback? Governments should be afraid of their people, but Abuja is not. Many have said that Nigerians deserve the kind of government we get and that we are too resilient to successfully protest anything, but I will advise Abuja not to assume that this is the permanent temperament of the citizenry.

The welfare of citizens is the primary responsibility of government, and this must shine through every policy stance or program of a self-named Transformation Government. In a case where citizen welfare will be threatened, the palace cannot continue in selfish display of waste while the people are asked to cut more pounds of flesh in honour of the existence of the “commonwealth”. The 99% in Nigeria is not responsible for the outrageous expense at which government is run today, so why punish a people by making them suffer for a crime they didn’t commit? Cut the cost of government. Remove that shameful N2.5 million “banquet allowance”, cut Security Vote, reduce the number of ministries (some are close to mirror images of each other, and why do we have Ministers of State?), and ask the other arms of government (hello, legislators) to do the same. When cost is down, improve the quality of governance. After you’ve done that, and you earn the trust of the people, come back to the table for a debate about how fuel subsidy removal can bring about overnight transformation.

For Immediate Release: The Federal Government’s Games with Fuel Subsidy

December 12, 2011. Lagos, Nigeria – Despite the concerns raised by different groups and individuals, President Jonathan will, tomorrow, present the 2012 Budget to the National Assembly excluding the provision for fuel subsidy.

In her two appearances before the Senate Joint Committees on Appropriation, Finance and Petroleum Resources (Downstream) for the public hearing on “The Operations of the Fuel Subsidy Scheme in Nigeria,” the Minister of Petroleum represented the Federal Government’s position as follows:

The fuel subsidy structure is inefficient, costing us N600bn (~$3.75bn) in 2010 and N1.3 trillion (~$8.125bn) from Jan – October 2011. The Federal Government cannot continue to pay as it’s unsustainable. By removing the subsidy, the savings will be used to provide critical infrastructure and services. Currently, only a small percentage of Nigerians (the marketers, middle & upper-class Nigerians) benefit. When removed, more Nigerians will benefit.

In the words of a Yoruba proverb, the Federal Government has, yet again, left leprosy to treat ringworm. While we understand that the current cost structure is unsustainable, Nigerians can no longer afford to pay for government’s inefficiencies. It’s too expensive (financially; productive man hours and human lives) and it’s also NOT sustainable.


1. A lazy, thoughtless approach
The government clearly finds it easier to undertake an unwise blanket removal of subsidy than engage in the discussion of trimming the inefficiencies in fuel subsidy management and in the running cost of government. The language is also deliberately confusing – one minute it’s ‘deregulation’ and the next it’s ‘fuel subsidy removal’.

2. How much subsidy?
The Interim Report on the Process and Forensic Review of NNPC by KPMG states “Based on our analysis, subsidy over-deduction for 2007, 2008 & 2009 was estimated at N2 bn, N10.3 bn and N16.2 bn respectively. A rough estimation of subsidy payment on product losses for the period under review (2007-2009) is estimated at N11.8 billion.” Clearly, the subsidy management regime is fraught with waste, graft and insincerity; evidence that the ‘N1.3 trillion’ does not accurately reflect the amount of petrol imported or consumed by Nigerians.

3. A matter of trust?
To counter the argument that Nigerians do not trust the government to wisely manage the ‘savings’ from the removal of the fuel subsidy, the government is planning a subsidy savings management program. The details were shared by the Vice-President in a meeting with some civil society organisations on Friday, December 9th. Why has this plan not been made public? The questions and concerns that arise are obvious ones:
(a) How does the government plan to calculate ‘fuel subsidy removal savings’?
Will these savings be the theoretical cost of the subsidy – minus cost of corruption – or the current (inflated) figure? Also, how does the government intend to remit same to this proposed quasi-government agency? Will this necessitate the setting up of another special account, in the manner of the Excess Crude Account?
(b) The Obasanjo regime wound down the widely acclaimed PTF because it served as a duplication of the work of the ministries. We agree with this approach.
(c) Setting up a new body means an increase in recurrent expenditure for staffing, salaries, pensions, cars, running costs etc. This is UNACCEPTABLE.

4. No Effect on the Poor
The government’s assertion that the subsidy removal would have little effect on the poor is quite simplistic. The resultant increase in the price of PMS would drastically increase the cost of food, transportation and doing business, shutting down many small enterprises which directly or indirectly depend on the price of petrol remaining low. The middle class is the engine of growth by way of consumption and the SMEs that create jobs. Any strain on them is negative for the economy.


The government should take a more measured and sustainable approach that takes into consideration all stakeholders in the Nigerian project. They need to:

1. Reduce Cost of Governance
The government must drastically cut down the cost of maintaining public and civil servants – security votes, multiple advisers, fuel guzzling convoys, excessive foreign travel and estacodes etc. Expenses such as (a) the Vice-President’s residence awarded to Julius Berger at N7 bn ($43.75m) with a request for N9 bn ($56.25m) more; (b) disbursement of N250 billion per year in ‘security votes’ to the President and Governors; and (c) a N1.7 trillion wage bill (2012 Budget) are criminal and unstainable!

2. Reduce Cost of Subsidy
Why does NNPC get 445,000 barrels of crude a day that it can’t refine? In 2006, there were 3 marketers; we now have 77. According to BusinessDay, “the increase has also been linked to this year’s elections and it has been suggested that the subsidy programme became an avenue for patronage extended to those with political connections.” Significant savings can be made on the bandied N1.3 trillion if the government will prune out the “briefcase marketers”, clean up the NNPC/PPPRA to plug waste and leakages, and tackle smuggling.

3. Restore or Sell the Refineries
This is of critical concern and priority. Increasing the capacity of our refineries would reduce the amount of fuel that needs to be imported into the country. How much has been spent on repairing the refineries in the last 12 years?

4. Provide Power
According to a 2009 report by the Nigerian Electricity Regulatory Agency (NERC), Nigerians spend N797 billion yearly to buy fuel for powering generators. In 2010, President Jonathan said the cost of fuel (to power generators) was $13 billion. NERC’s estimates 32% of generator fuel is PMS. This means Nigerians spend about $4.19 billion or N646 billion on petrol, while the rest goes to diesel. Imagine how much fuel import dependence we can curb if this government fulfills the often-repeated promise of improving power supply in Nigeria!

Why has the government not presented a policy document or engaged openly and directly with Nigerians on this issue? Why the rush to remove the subsidy when other holes have not been plugged?

Enough is Enough Nigeria will continue the conversation by hosting a public Town Hall Meeting within the next 10 days to discuss the issue. In a country that provides no social services and the average citizen provides all basic utilities – water, electricity, and security; the government cannot remove the bread from our mouths while it continues to feed fat on its princely cakes.

We will engage in words and action. Enough is enough!

Guest Post: “Still on Sustainable Electricity”

by Engr. Titi Omo-Ettu (President, Association of Telecommunications Companies of Nigeria)

Mr Olatunji Ariyomo raised very good and informed points in his ‘Sustainable Electricity: How Nigeria Can Get It Right’ which I had read on Saharareporters.com and found compelling especially as I am one of the author’s Facebook contacts.

As a concerned Nigerian, and part of the long suffering citizenry, while I think we should revisit the subject matter, I think it is too serious to be left to the trivialities of social media.

As a member of the Association of Telecommunications Companies of Nigeria, ATCON, and its serving President, I adjudge it my responsibility to not only make it publicly known that we remain unimpressed by current plans for energy reform of the Nigerian Government but to postulate that it will be a miracle if the current proposals actually take us out of darkness.

We had harboured hopes that the managers of the ongoing energy reform would take a leaf from the modest progress made in telecommunications development in the past eighteen years replicating the things that we did right while avoiding those we did wrong, On the face of it, those hopes now seem misplaced.

At the epicenter of what we did right, was genuine liberalisation which saw us give out licenses to investors to open up our market and provide, sell, as well as augment their investment and networks. By creating a progressively fair investment environment, we turned aspiration into reality and a subsidized loss making sector into one that returned funds into government’s coffers – all with minimal government intervention. We also made the point to Government to stop throwing money at our problems.

Although these energy reform managers are inviting investors to participate in power supply process, they are merely presenting an illusionary version rather than genuine liberalisation and are deluded in thinking they will impress genuine and world-class investors in the present circumstance. They would do well to remember that for all the development in our telecommunications sector, we have failed to attract world-class investors to date for reasons. For reasons, perhaps not for mentioning in this intervention, the best of the emerging markets is all we have been able to attract thus far.

Producing electricity and feeding such into a national grid is not attractive to investment especially if the buyer of the product is a government rather than consumers. We observed that the government eventually identified this lapse and is presenting the creation of the Nigeria’s Bulk Electricity Trading Company as the answer. – yet another illusion which is bound to fail for it is merely establishing a bureaucracy (regardless of the name ‘Company’) where a true business model solution is required.

Selling our generating plants to private investors is an open invitation to full scale corruption which we should not allow under any circumstance and to that extent we align with those who oppose privatization of anything at this time.

Regrettably, the word ‘privatization’ has been confused with ‘liberalization’ thus making communication (with a small ’c’) very difficult, even when there is a genuine attempt to have a dialogue. Liberalization is about motivating investors to determine what sectors of the community they want to provide services for – and they often and most successfully do this without the encumbrances of dealing extensively with government bureaucracies, aside the regulator.

In my estimation and one which has hitherto been recommended, is a model of decentralized architecture, Engr. John Ayodele, FNSE recommended it in the form of Distributed Generation for our public electricity supply system when he delivered the NIEEE Annual Lecture in 2009 while I, Engr Titi Omo-Ettu, FNSE gave similar recommendation when I delivered the 2010 edition (Pathway to connecting the Last Man) of the same Lecture. Granted, of course, that since we put those recommendations in books, we might have been truly hiding them.

With such a viable model, we can provide 24/7/365 supply of electricity to many parts of this country within six months. We can also generate more than 40,000 megawatts to serve various communities of the country in 3 years. Today we probably do more than 30,000 Megawatts except that everybody does his own generation while government augments with less than 5,000 Megawatts.

Regrettably, our energy managers rather than thinking about the ‘regular supply of power’ via a decentralized architecture – the forgone alternative deployed successfully in the telecommunications sector, are, for narrow self- interests, fixated on thinking in ‘megawatts’ in grid supply.

I am aware that the managers of energy are busy navel gazing just like we in the telecommunications sector did several years ago – an attitude that we had to change before we could take Nigeria out of telecom darkness.

Also regrettably, the shift stick of progress that has become a hallmark of the telecommunications sector in spite of very poor electricity, is not only stuck in neutral but rather in danger of being stuck in reverse as it is now inconceivable that we can move forward without real improvement in infrastructure and access to adequate electricity supply. Knowing what we do, inaction is not an option as it will inevitably lead to the desecration of not only the energy but the telecommunication sector too.

The pain in one’s neck is that we keep groping and give an impression that we cannot do it. The good story is that we have demonstrated elsewhere that we can.

A painful error was made when an aspiring Minister told our Senators that he could not guarantee regular electricity until after 3 years and yet he was allowed to wear the badge of “Minister of Power”. That brings tears to my eyes and to ask what manner of representative democracy this is.

And to ask myself , how do we get out of this quagmire?

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Sapele Library Book Drive 2011

I’m always quick to say that while we curse the darkness, we must also be sure to light candles. These folks are taking steps, and I’m glad to share. Please support the effort…

November 10, 2011 – Sapele, Delta State. The “1000books in 40days” book drive is a book donation initiative that seeks to begin the process of equipping the Sapele Public Library. d-xtreme unit foundation decided to undertake an upgrade of the library since we realize the strategic importance of books and a conducive reading/learning atmosphere to the youths, who are the next generation of Nigeria’s leaders.The Sapele Library has been in existence for almost two decades but has not received any attention from government in over a decade, the last time it received any sort of touch was last year,2010 when d-xtreme unit foundation undertook a make-over that included clearing of the surroundings, painting of the entire complex and fixing of electrical fittings.

We have a situation where the library is not beneficial to school pupils, secondary school students , undergraduates or the public that it was set up to serve. We always criticize the dearth of a reading culture among the youths but what about reading tools and conducive atmosphere? Our 40day target (November 10 – December 20) is to raise at least a thousand(1000) units of books and allied materials. Books for kids, primary and secondary school pupils, undergraduates and graduates are our emphasis. d-xtreme unit foundation have so far raised over  two hundred(200) books but seek a broader participation, so we are appealing to individuals and corporate organisations to team up with us.

There is no limit to the number of book(s) you can donate. Whatever form individuals or companies desire is totally acceptable e.g. branded books, specific subjects-like kids books,  etc. These are our contact for sending donations. Thank you!

Contact: C/O CHARIS BOOKMART, 108 Okpe Road, Sapele, Delta State.08072692854
Drop-off contacts: *LAGOS: Uyi – 08038858241, 08072790212 *ABUJA: Kayla – 08060484014 *SAPELE: ‘yoma – 08052760597

d-xtreme unit foundation is a part of the d-xtreme unit which started as a group in 2004 with interests in entertainment, media and  social entrepreneurship. We have distinguished ourselves in the Sapele community and within Delta State since 2004, initiating events and projects that entertain, educate and inspire.