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Fuel Crisis


6 April 2016

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AS ENERGY CRISIS DRIVES NIGERIA TO ANOTHER BRINK, LABOUR SHOULD WAKE FROM SLUMBER

Times are Harder; Working People and the poor are Suffering!

Democratic Socialist Movement (DSM) Statement

Nigeria has continued to be gripped – yet again – by acute fuel scarcity. The simultaneous collapse of the already scandalously poor public power supply system - leading in most parts of the country to near zero supply of electricity means that the energy crisis is hydra-headed. And the effect is telling hard on all - the urban and rural poor, the petty traders and artisans, the industrial workers, the professionals, the market men and women, the middle class etc.

The Director of the Lagos Chambers of Commerce, Mr. Muda Yusuf put the situation succinctly while speaking during the Channels TV news bulleting last Sunday night April 3, 2016. According to him the economy is grinding to a halt as the energy crisis bites harder.

In the same vein an online publication by the Point quoted the President of the Abuja Chamber of Commerce and Industry, Mr. Tony Ejinkeonye, as saying that Micro, Small and Medium-scale Enterprises have lost about N30 billion to the persistent fuel scarcity in the last 30 days.

He was quoted further: "We have made it clear that the development shows that we are incompetent managers of our resources. Labour productivity is low as employees have stayed off work since the hike of fares by transport providers; and when they come they are always late. These have forced some of our members to close shops".

In general The Point said economic experts, have described the current scarcity as the worst in the history of the country, warning that unless the Federal Government is proactive in addressing the menace, the manufacturing sector and other service providing firms may lose more than N100 billion, which they lost within one month, if the scarcity persist in April 2016.

But in truth, no nuclear science or economic expertise is needed to explain the on-going sufferings of Nigerians. In a country where the minimum wage remains a paltry N18,000 (less than $100 at the current exchange rate of one dollar to about 300 Naira), a litre of fuel is being sold at between N150 and N300, against the supposed official price of about N87. And that is where the precious commodity is even available as in most instances now across the country, the petrol pumps are simply drying up while expectedly the ever handy black market is thriving.

Confronted by very poor power supply and in desperate need to survive, the poorest segments of the society who rely on daily income from such sundry works as pepper grinding, hair barbing, commercial motorcycling and tri-cycling, saw milling, etc., are forced to part with the little they have just to survive. Most are of course operating at a loss as there is a limit to which they could raise prices without seriously undermining patronage.

In general the fuel crisis and the earlier collapse of the Naira against the dollar mean that prices of goods and commodities have skyrocketed. Sellers, be they retailers and or wholesalers, now charge more because both transportation costs have gone up and the cost of commodities and goods are skyrocketing. Transporters on the other hand have increased fares by as much as 200 to 500 percent because they are buying fuel at exorbitant prices. Also operators of Airlines have started to complain that aviation fuel is being affected as well thus raising the spectacle of a rise in airfares. It is all about a vicious cycle of suffering.

What manner of change?

For long, Nigerians are used to drawing upon the metaphor of Fela Anikulapo's famous song – Suffering and Smiling - to explain the country's seemingly perennial social economic crisis and the citizens' seeming ability to always manage to smile despite their sufferings.

But as the current crisis continues to unfold, rarely are there Nigerians that are finding the situation funny anymore. The most commonly uttered statement at chaotic scenes in filling stations and street gatherings now is either, "is this the change we voted for?" (for those who voted for the APC government led by General Muhammadu Buhari) or "is this what they call change" (mostly by the neutrals).

Truly, most of those who voted for the current government did so out of frustration with the 16-year ruinous rule of the erstwhile Peoples Democratic Government (PDP). Through wanton looting of the treasury including the theft of about 16 billion dollars of money meant to rebuild the power sector, the hall mark of life under the Obasanjo, Yar 'Adua and Jonathan regimes was under-development and social economic hardships especially those wrought by the anti-working peoples policies of commercialization and privatization. The other reason why the change mantra gripped some was the expectation that the Buhari regime would fight corruption especially as prevalent in the oil sector since he had always donned the proud toga of a non-corrupt military leader.

But amidst the cacophonous calls for change and despite the justifiable anger against the PDP pro-rich and anti-poor government, the Democratic Socialist Movement (DSM), had warned during the elections that the working peoples should not invest undue hope in the so-called progressive wing of the ruling class, which despite its change rhetoric, the DSM said it would run the economy along the same capitalist lines which inevitably means repeated crises in which working people suffer. In this sense nothing fundamental would change from the situation under the erstwhile PDP government. This acceptance of capitalism is why Kachikwu, Buhari's Minister of State for Petroleum Resources, argues that the way to end fuel queues is "through the privatization of the petroleum industry" (Vanguard, April 6, 2016).

Signs of this working within capitalism were earlier evident when the current Minister of Power, Work and Housing, former Lagos Governor Raji Fashola announced over 200 percent hike in electricity tariff at a time of worsening power supply. But the current fuel crisis means that Nigerians are learning the lesson the harder way as they are being made to pay for the crime of the privileged rich few

Familiar tales amidst policy somersaults

In the wake of the current fuel crisis has emerged the same old tales about the causes. From pipeline vandals to unscrupulous marketers, there has been no shortage of who to blame just as it was in the past. Meanwhile, when fuel queues first emerged late last year, accusing fingers were quickly pointed at what the government described as the unsustainable subsidy regime. The real subsidy scandal, it must be recalled, had actually broken out under the Jonathan regime when in January 2012, it attempted to increase fuel price claiming that many oil companies it paid billions of dollars as subsidy had failed to import the fuel for which they were paid. The massive and largely successful strike and mass action that greeted the decision, showed that the mass of the working peoples were not prepared to pay for the theft of the rich.

The new Buhari regime apparently bought the argument that subsidy payment fuelled corruption and in turn fuel scarcity while also regurgitating the old argument that if subsidy payments were stopped there would be enough resources to construct roads, provide infrastructure, fund health care and education etc. It was thus with fun fare that the regime announced in the beginning of this year that it had stopped subsidy payment. Coupled with the announcement that the Nation's four refineries had been revived while the government would embark on importation to meet any shortfalls in supply, it was expected that there would be some measure of stability in the fuel market. However, the major reason subsidy is no longer accommodated in the new pricing is simply because of the low prices of crude oil which have brought down the landing costs of petrol. This means that pump prices of petrol would be increased if the oil prices rebound.

Meanwhile, the Minister of State for Petroleum, Ibe Kachikwu announced recently at the end of a meeting with Independent Petroleum Marketers that they would be provided needed incentive to embark on massive fuel importation. Although the original complaint of the so-called independent marketers was that they could not source needed foreign exchange to fund importation of petroleum products it cannot be ruled out that the government and major marketers are attempting bring back subsidy through the backdoor blaming the "unfavourable and unprofitable" exchange rate despite the very low crude oil prices with the attendant implication that Nigerians are once again at the mercy of the famous, yet faceless oil cabals.

Fundamental problems remain

Despite the claims of its advocates the much vaunted privatization has not resolved the fundamental problems besetting Nigeria's oil and gas sector. The first and most obvious of the problems is the desolate state of the Nation's four refineries, which even at optimum capacity cannot meet local demands; hence the heavy reliance on importation of manufactured products. It should be obvious enough that if the additional refineries were built or even the process of so-called private refineries accelerated then there might be sufficient fuel to meet local demand. But doing that would run against the interests of the capitalist profiteers in charge of the oil sector. What they want is precisely what is happening, so they can continue to make supper profits. On the other hand, the oil sector internationally is facing the crisis of over-production and collapsing oil prices, which have compounded the foreign exchange problems of dependent capitalist economies like Nigeria.

The second obvious problem of the Nigerian oil and gas sector is that of corruption at the centre of which is the state oil industry- the Nigeria National Petroleum Corporation (NNPC). Not only that NNPC's accounts are unaudited, it spends billions of dollars earned revenue without recourse to any of the constitutionally established authorities. Buhari's war on corruption was expected to extend to the oil sector but emerging facts suggest that nothing much has so far been achieved if at all anything fundamental can be achieved. For example, the Natural Resource Governance Institute (NRGI) in its latest report said NNPC has been withholding more funds that it even did under the Jonathan regime.

The online Cable newspaper under the title 'NNPC, withholding more revenue' under Buhari than it did under Jonathan' reported on the findings of NRGI in its April 1 edition as follows:

"The Nigerian National Petroleum Corporation (NNPC) withheld 12 percent more money in six months under President Muhammadu Buhari than it did with his predecessor from 2013 to 2014.

According to a report by the National Resource Governance Institute (NGRI), an international non-profit policy institute with focus on oil, gas and minerals, NNPC withheld more in the last six months of 2015 than in the first six.

"Under the Buhari government, transfers from NNPC's convoluted oil sales system to the Federation Account have continued to decline," the report read.

"After analyzing NNPC's own numbers, we estimate that during the last six months of 2015, the corporation transferred $2.1 billion in oil proceeds to the Federation Account from the three types of oil sales we examined: regular export sales, domestic crude sales, and sales of oil from NPDC fields.

"During that same period, however, the value of these sales totalled $6.3 billion. In other words, under the Buhari government, only one third of NNPC's oil sale revenues found their way into the country's treasury.

"The figures show that NNPC retained $4.2 billion in the last six months of 2016, 14 percent more than what was withheld in (Goodluck) Jonathan's last days as president.

"NNPC reported retaining $4.2 billion-or 66 percent-of the value of the oil sold through these three types of transactions.

"As seen in the figures below, this was 14 percent more than the corporation's withholdings under Goodluck Jonathan in the first half of 2015, and 12 percent higher than the share withheld in 2013 and 2014.

"Go back a decade, and the numbers nearly flip: in 2005, NNPC sent 68 percent of its oil sale earnings to the Federation Account and kept only 32 percent."

The report, which was compiled based on NEITI financial audit reports, NNPC financial reports, and NRGI's investigations, revealed that NNPC withheld 52%, 52% and 59% of its revenue in 2013, 2014 and 2015 respectively.

NNPC's corruption and other atrocities being perpetrated in connivance with private oil racketeers continue to make mockery of Nigeria as one of the largest oil producers in the world. However while much hot air has been made about the opaqueness of the downstream, seldom is said about the upstream where a handful of International Oil Companies (IOCs) call the shots. Their earnings from crude oil production and export of our natural wealth dwarf our entire state revenue from oil. Legally, Nigeria may have titular ownership of the oil resources; but its actual control is in the hands of private profiteers instead of ordinary people. The truth is that an oil sector driven by corporate greed and profit interest can only bring so much misery to its people. As an angry young Nigerian screamed at a fuel station in Benin city while being interviewed on Channels TV last Monday "water water everywhere, not a drop to drink; we produce oil in this state, oil pipelines run through our backyard but see the way we are suffering".

Fundamental solutions possible but Labour's intervention and leadership needed

It is apparent that Nigerians are angry and are yearning for a way out of the current crisis but the leadership of the labour movement especially the NLC and TUC and even the unions in the oil sector like NUPENG and PENGASAN have so far failed to act decisively and proactively. Giving the hardships being encountered by the working masses across the country a one-day warning general strike to the regime to end the fuel crisis would receive massive support.

But much more is expected from labour, which must also resist the privatization and commercialization of the oil industry.

The DSM again reiterates that the key to resolving the crisis in the Nigerian oil sector is its nationalization but under the democratic control and management of the working peoples including the workers and professionals in the oil and gas sector, the trade unions in the sector, the broad trade union movement, representatives of the oil producing communities, representatives of oil consumers, etc. Those who benefit and profit from the perennial fuel scarcity cannot be expected to be interested in ending it on a permanent basis. Even if the current crisis is brought to an end now, it would return sooner or later. But the working class democratic control and management of the oil and gas sector would translate into the peoples led democratic management stoppage of corruption and the liberation of resources with, which more refineries and other basic oil and gas infrastructures, can be built to meet the energy needs of the people and the economy.

For too long have the masses of poor Nigerians taken for a ride by different sections of the capitalist ruling class. The labour movement should be at the forefront of the demand to stop making the poor masses to pay for the crimes of private profiteers. The call must go out from labour organisations and activists that the labour movement should move beyond simply issuing press releases and seriously today:

  • Declare a one-day warning strike and nationwide mass protest to end the current fuel scarcity. As part of the mobilisation for the strike action, the DSM challenges labour to organise mass meetings, symposium and rallies at every communities and states across the federation to bring together workers, ordinary Nigerians, artisans, youth, unemployed, students, civil societies and pro-labour organizations to begin to discuss the energy crisis and proffer solutions that can be of benefit to the working masses.
  • Demand for the working peoples' democratic management and control of the NNPC and the wider oil sector– for a full disclosure of all NNPPC's earning and spending
  • State its opposition to further privatisation and demand for the nationalization of the oil industry, the energy and power sectors and other commanding heights of the economy under working class and peoples' democratic control and management given the apparent failure of the privatization and commercialization policies besides imposing hardships on the working people. This would lay the basis for the planned use of Nigeria's resources to meet the needs of its people, not the profiteers.
Segun Sango
General Secretary, DSM