Fantastically sharp u-turn

In the same week that, with the timely help of the Archbishop of Canterbury, President Muhammadu Buhari repelled Prime Minister David Cameron’s undiplomatic charge that he is leading a fantastically corrupt country, his administration made a fantastically sharp policy u-turn at home. For a man who is not given to humour or sharp wit, Buhari’s […]

In the same week that, with the timely help of the Archbishop of Canterbury, President Muhammadu Buhari repelled Prime Minister David Cameron’s undiplomatic charge that he is leading a fantastically corrupt country, his administration made a fantastically sharp policy u-turn at home.
For a man who is not given to humour or sharp wit, Buhari’s answer to Cameron had a Winston Churchillian quality. Asked if he wanted an apology from Cameron, Buhari said, “No. I am not going to demand any apology from anybody. What I am demanding is the return of assets. What would I do with an apology? I need something tangible.” This will probably be remembered as his most memorable phrase since dog and monkey.
The decision to deregulate fuel prices was so personally embarrassing for President Buhari that he arranged for it to be announced only when he was thousands of kilometres away from Nigeria. As leader of the political opposition he had been saying for years that he did not believe in removing fuel subsidy. In fact, he went beyond that to question the reality of fuel subsidy. This line of thought, so ably propounded by leading APC figures over the years, was that the fuel subsidy fund was just a scam to enrich PDP chiefs and crooked businessmen, that in reality petrol costs less than the officially banded figure and therefore no subsidy was needed. Or that if subsidy was needed, it was because the refineries were criminally run down and fuel has to be imported.
For example, Buhari said in 2011 that he was completely opposed to the removal of fuel subsidy. He said in Yola at the flag-off of General Buba Marwa’s governorship election campaign that Nigerians should rise up and speak with one voice to ensure that the planned removal of fuel subsidy was not actualized. He said, “Nigerians are being deceived on the issue of fuel subsidy. The federal government takes out fuel for refining, only to come back and talk of removing the subsidy. That is nonsense and an attempt by a clique within the PDP led federal government to siphon the proceeds to be realized from the removal of oil subsidy.”
In July last year when he was briefed by Ministry of Petroleum and NNPC officials, the president said, “I have received many literature on the need to remove subsidies but much of it has no depth. When you touch the price of petroleum products, that has the effect of triggering price rises on transportation, food and rents. That is for those who earn salaries but there are many who are jobless and will be affected by it.” He also said insecurity, sabotage, vandalism, corruption and mismanagement, and not subsidies, were the main problems of the downstream oil sector. Up until early this year, he was saying the same thing.
From the outside, it looked as if there was no economic policy debate going on within Buhari’s councils, mostly because the president appears to hold the same viewpoints dating back to the 1970s. There must have been intense internal debate and pressure from trusted aides that got the president to change his mind on such a sensitive issue. In my mind’s eye I can visualise Buhari caving in to the persistent arguments of Osinbajo and Kachikwu by saying, “Okay, go ahead and announce it, but wait until I am out of the country.” For a man known to have a nerve of steel, to arrange to be away from a controversial policy announcement is a first for Buhari. Vice President Osinbajo and Minister of State for Petroleum Kachikwu agreed to make the unpopular announcement but everyone knows they could not possibly have taken this decision on their own. Besides, Alhaji Lai Mohammed would never rush to town to defend it unless he knows that the Big Masquerade endorsed the decision.
I am an inconsequential masquerade in this matter but I personally support the decision to deregulate fuel prices. I am not making a fantastic u-turn; I took the same position during the Occupy Nigeria saga of January 2012. Daily Trust on Sunday’s Page Three comment of yesterday, which also supported deregulation, said it is not because we at Daily Trust are happy to buy expensive fuel. I verily concur; when I started buying fuel in Nigeria in 1977, it cost 20 kobo a litre. I needed only one naira to fill the tank of my Yamaha 100 motorcycle. Less than four decades later, the price has climbed from 20 kobo to 145 naira a litre, a 72,500 percent increase.
How can I be happy with that? The truth however is that fuel has been much more expensive than the officially touted price of N86.50 for far too long—-the serially recurring shortages; the very long, time consuming, energy sapping and nerve wracking fuel queues; the phenomenal national profligacy of devoting huge chunks of the federal budget to subsidy payments; and the monumental fraud that goes with it. Unlike the president, who believes that the Nigerian public sector can be shortly turned around with the anti-corruption war, I do not think this can be done in my lifetime. I am therefore resigned to seeking a little more private-sector driven efficiency, even if I have to pay for it through the nose. It is a personal version of the Doctrine of Necessity.
Another looming trouble is, fuel subsidy is one out of a series of socio-economic dominoes that the Buhari regime must grapple with. As with all dominoes, when one falls, the others are likely to follow suit. For example, as part of the subsidy removal package, we were promised cheaper fuel down the road when the four refineries are fixed. Will that ever happen? Governments have been trying for several decades to fix the refineries, without success. Then also, even when these four refineries are producing at optimal capacity, they will meet only 40% of our current consumption of 40 million litres a day. The Buhari regime’s can-do image will be dented if the refineries are not up and doing by year’s end. The same experts who managed to convert the president to deregulation will now argue that government has no business running the refineries and that they should be sold off, as President Obasanjo tried to do in the last week of his presidency.  With much teeth gnashing, Buhari may come round to agree that the refineries are better off in private hands.
The next domino after that is the naira. Deregulation will greatly embolden those who argue that, just like fuel, the naira’s value should be determined by demand and supply. As one expert observed, there is one visible Achilles’ heel in the oil supply policy announced last week. Though it said fuel importers are free to source forex from the black market, it did not say whether they are excluded from CBN’s official forex market. For, fuel importers will now be looking for dollars both from CBN and the black market. Those who obtain it from CBN will have a sharp advantage over those who didn’t, but who will force them to sell petrol at a sharply lower price? That means Nigerians will still be paying backhand subsidy, in billions, to some favoured fuel importers. The answer, experts will tell Buhari, is to deregulate the forex market. When dominoes start falling, there may be no end to it.