Is Ibe Kachikwu This Government’s New Year Sacrifice?

Kennedy Emetulu·

Following Dr Ibe Kachikwu’s Christmas day outing at the Port Harcourt Refinery where he gleefully announced the removal of petroleum subsidy and a reduction of the pump price of fuel in Nigeria from N87 to N85 (something he said he’d already signed off a day before Christmas, but due to be announced on January 1, 2015), Nigerians had called for further clarification from a Minister fast becoming an expert in obfuscation. But what did we get? Another outing at Kaduna Refinery and more obfuscation in a supposed attempt at clarification.

In this latter outing on Sunday, 27th of December 2015, Dr Kachikwu now says rather than believing that the price of petrol will be N85 come January 1 2016, we should wait for an official price to be announced in January. He said the “subsidy element” has been “eliminated”, but the price has not been deregulated nor would it be deregulated in January. “It will be adjusted within the modulating band of N87 per litre to N97 per litre in accordance with the international price of crude oil,” he said. Doubling down on his obscurantist agenda, Kachikwu said the price of petrol “may be increased above the current selling price or may be reduced below the current selling price all things being equal”. He would not say if the subsidy regime is still in place, but he kept on his public campaign of vilifying it, describing it as “political subsidy”, which the government has spent huge amounts on, but which it now intends to replace with “price modulation”, which he curiously claims will now create a stable market. “If there is an increase or decrease in the price of crude oil, we will make the necessary adjustment, so in January 2016, we will announce the new price of petrol in accordance with trends in the market,” he said.

In fact, to fully understand the problem now being created, it is crucial to deconstruct Dr Kachikwu’s semantics in a little more detail. In explaining his claim that subsidy has been removed, Kachikwu now says that the federal government is currently not paying subsidy on petrol due to the low price of crude oil in the international market. He thinks this situation would likely remain unchanged as far as oil prices remain low. But rather than explain what this all means in terms of whether the subsidy regime has actually been done away with or not, Dr Kachikwu slithered away, claiming he is more interested in ensuring that petrol is available and affordable than dwelling on subsidy removal! Of course, by doing this, Dr Kachikwu has created a false debate. The issue is not whether subsidy should go versus availability and affordability. The fact is availability and affordability are directly affected by the present operation of the subsidy regime in its corrupt state.

Dr Kachikwu’s commitment to obfuscation couldn’t be clearer when, under further pressure to clarify, he deployed the dopey strategy of roping in the rest of us into his semantically suffused world of doublespeak. Hear him:

“First let me say that we are expending too much energy on semantics. There are two critical issues here, one is should the federal government continue to fund the gap that we see – this a huge N1 trillion, and I think everybody is on the same page that we need to get out of it. Where we have a disagreement is if we get out of it, should we sell products at a certain price or should you let the free market to roll in so that you can skyrocket prices. Today, there is no subsidy, we are selling products at N87. In January, we will look at what the trend is and we will announce prices, if that is less than N87, we will announce it and if it is more than that, we will have to announce it.”

Note the claim that today there is no subsidy at N87, yet a Punch newspaper report of Tuesday, 29 December stated clearly that the Petroleum Products Pricing Regulatory Authority’s official template Dr Kachikwu was referencing on Christmas day had in its update of the same day a price of N93.45 per litre as the Expected Open Market Price (EOMP) for petrol as against the official retail price of N87. What this means of course is that as Dr Kachikwu was there claiming no subsidy, the government was actually subsidising the price of fuel by N6.45 per litre.

In emphasising that President Muhammadu Buhari backs his price modulation mechanism, Kachikwu said:

“The president is very emphatic on this, he says for now, he expects that products should be at N87. He has also given approval for us to be able to look at market trends and make adjustments as need be, so when you keep asking me if subsidy has been removed, I ask what is subsidy? At today’s price, there is no subsidy and that is why I have gone away from the use of the word subsidy and have continuously said that I am more on the page of price modulation. How do we look to fluctuate the market to reflect market dynamics?….I don’t want to get caught into this subsidy or no subsidy issue, or on money provided in the budget or not. I think what is critical is two fold: one is that the amount that we spent in the past on providing what you might call monetary subsidy is huge, we have never been able to account for it and the amount of corruption there, nobody has been held to account. The reliability of that and the affordability of that is an issue we need to get away from whether or not you believe in subsidy.”

In explaining the president’s desire to establish a regime of efficient and affordable fuel supply in the country, he put forth a hypothesis:

“Would you therefore free the price so that people can sell at whatever prices? Not likely, we would like to see some level of modulation where prices can relate to what the market dynamics are and that is what we are doing. My commitment and I think that is what the president’s commitment is, is one, provide products all the time so that there is efficiency, and provide it at the least possible price that you can and let it have some relationship with what the trends are.” He then added that “when the price of crude oil begins to go up – and we have an interest in both because we want the price of crude to obviously rise – and begins to affect the selling price of local products, we will look at those trends and then begin to see how we can adjust our pricing. But we are not going to be adjusting prices on a day-to-day basis, we are going to take like an average price and I think that today when you look at prices, we have no subsidy but prices remain low and that is what we need to do”.

What Dr Kachikwu has told us with his comment and body language is that this government is not ready to deal with the corruption in the subsidy payment system. Instead, it has now introduced a new subsidy off and on switch, which it operates as it wishes in cahoots with those benefitting from the corrupt subsidy regime. In other words, rather than clear the subsidy regime of the corruption that is the problem we have universally identified, the Buhari government is cloaking it with another layer of obfuscation. The fact that Dr Kachikwu keeps presenting his “price modulation” proposal as the alternative to subsidy removal clearly shows his intention and that of the government to paper over what the real problem is and transfer the monumental cost of the corruption in the system to Nigerians, rather than deal with it as it should.

Indeed, as some of you would have noticed by now, listening to Dr Kachikwu explain the new government policy on the price of fuel is headache inducing. I can’t stop wondering if Dr Kachikwu is this government’s New Year sacrifice, because his talks and actions from the moment he stepped on the podium at the NNPC town hall meeting in Abuja on Thursday, 17 December, 2015 to his latest Kaduna Refinery supposed clarification mission smack of someone being put out there to take the flak for a bad policy that will surely explode in the face of those engineering this. I mean, how can a man of his education, knowledge and experience not see the apparent contradiction in engaging in deregulation and price fixing at the same time? How can he not see that the supposed political imperative to survive at the moment is of no significance economically or politically when the post-January 1 backlash from the lies begins to manifest? Why is he the one put forward to sell this lie that will ultimately undermine this government in the eyes of the Nigerian people?

Dr Kachikwu apparently thinks government’s responsibility over the provision of fuel for Nigerians is to sit by the metre daily adjusting the price in line with what they think is the market price, but someone should tell him that the core responsibility of government is to ensure that this product is available to Nigerians at all times at an affordable price, because we cannot and must not pay an ‘international price’ for a product we produce at home. Of course, Nigerians do not expect the government to import or sell the product, but considering the huge national economic and security implications of a volatile pricing of such an important product, Nigerians expect the government to achieve their expectation through well thought-out policies and regulations. Dr Kachikwu has told us that the government has paid over one trillion Naira in subsidy this year, so who did they pay this to and why? What is he and the government not telling us about this fuel subsidy and why does it look now like they are in cahoots with those benefitting from the fraud? I mean, what does it take to put the searchlight in there and clear up all the mess, so we can have a clearer vision of where we are going? Who is the government trying to protect by keeping the lid on what they themselves have acknowledged as the massive corruption in the subsidy system? Who is the government protecting when what we know as subsidy is actually the most inconsiderate form of rent-seeking?

Here is the problem: This government is being haunted by the ghost of January 2012. They know that the Goodluck Jonathan government made the economic case for subsidy removal in 2012, but they are aware that Nigerians know that elements of this government while in opposition, including President Buhari, were in the forefront of the national opposition to Jonathan and the removal of subsidy then. In fact, it is safe to say that the national opposition against the removal of subsidy marked the beginning of the fall of the Jonathan government and also first signalled the possibility of the opposition taking over government. Now, the Buhari government is exactly at that point the Jonathan government was at this time in late 2011 and they now have to make a decision on the same issue. Originally, Buhari’s western friends were telling him to take the decision quickly upon coming to government, so as to ride on the goodwill of the people at that time. They reckoned Buhari would have gotten away with it, because Nigerians still giddy from sipping from the decanter of his change mantra would have easily given him the benefit of the doubt. But Buhari prevaricated and now we are here. All he and his government see now is the ghost of January 2012!

But, like Jonathan, they have failed to make the political case for the removal of subsidy, despite thinking the economic case for it is sound. No doubt, Jonathan did move out with all his big guns to sell the political case, but he did this very late in the day. Now, this government wants to achieve the same thing Jonathan wanted, but they want to do so by playing ambush economics with the Nigerian people as their preys. The idea is to lull the people into a false sense of security, while they cross the dreaded January 1st date. They have invested hugely in lying about what they are doing and its effect and to do this, they have sent out one state official they think has the credibility to tell that lie with a straight face and that man is Dr Kachikwu. Kachikwu’s main strategy is to change terminology. Instead of talking removal of fuel subsidy, he talks price modulation. With Nigerians still confused about whether or not fuel subsidy has been removed, the false promise of N85 a litre for fuel as from January 1st is expected to keep them on a ‘wait and see’ watch, even after January 1st, considering the prevailing scarcity at the moment. Thus, once the government manages to cross the January 1st date without any protest, they will consolidate this by referencing the many lies and half-truths they have germinated in this period as fair warning. In other words, once complaints arise with the inevitable price increase after January 1st, if and when the product becomes reasonably available, Kachikwu and his people would explain with a straight face that it is not in their hands, but in the hands of the “market forces” or “in accordance with trends in the market”, just as they had warned us before. They will then enjoin us to pray that the market forces in their wisdom get the price down the next day or the day after or the day after and so on. Yeah, that is the kind of economic jungle Kachikwu and those beating the drum he is dancing to want to leave us in after January 1, 2016.

So, as difficult as it is to believe, this government seems consistently invested in creating mirages as substance. Obviously what Kachikwu and the government’s media people have planned is to make Kachikwu appear in and around refineries around the country and use the opportunity to release policy statements with the aim of achieving two things - one, to assure Nigerians that the fuel subsidy issue is no big deal anymore by promising them a fixed price of fuel at the current price or lower and two, to give the impression that government is working round the clock to meet the supply gap by getting the refineries working. The problem is both are fraudulent claims, because they will never deliver the results they want the people to expect as they themselves are not forthcoming with the truth. What Kachikwu is not telling people is that the notional price of N85, 87 or at most N97 he is claiming would come into effect on January 1st is not achievable, sustainable and enforceable. How can it be achievable when Kachikwu himself has stated clearly that the best case scenario in 2016 is that we will get 25% local production and 75% importation, while the worst case scenario is what we are experiencing now? There are those who believe what Kachikwu is saying is that if the price goes above N97, government will pay the difference with subsidy, but that is not what Kachikwu has said directly or indirectly. And if indeed that is the intention, how can anyone consider such a great policy? If as he claimed on Christmas day, they have removed petroleum subsidy, if as he says the element of subsidy has been eliminated going forward, how can it still be an option if the price goes above N97? Who will be paying for that and from which fund or from which budget?

We know that whatever Kachikwu says this government has paid as subsidy already only covers aspects of some supposed backlog. So, paying this money does not guarantee supply tomorrow and as far as government is still dependent on these fuel importers and marketers, the fuel will simply not be available, talk less of being available at that price, because government is not in control of its availability or distribution to consumers. So, where did Mr Kachikwu get the confidence to assure us that in the next few weeks queues will disappear in fuel stations?

Clearly, despite all the motions and shadowboxing, there has been no movement from the government side towards light. What we get is a movement towards incubating the corruption in the subsidy payment regime by taking it out of public discussion into a darkroom where the government and the importers and beneficiaries of the subsidy payments are the only players, even where no money has apparently been budgeted for subsidy in the publicly announced budget. Kachikwu keeps invoking the name of President Buhari like the name of God, claiming he wants the price of fuel to be N87, but are we operating a command economy? Is the president’s wish the economic reality we face or something he can effect by mere wishful thinking? It’s obvious that the same people the government publicly vilify as the corrupt merchants of the subsidy regime still hold the aces. They supply when they like and fix their own prices, which government now sells to us as “market price” and which they’d be adjusting willy-nilly without giving people an opportunity to plan, because with the new policy Nigerians wouldn’t know what price would be appearing on the metre the next day. I mean, isn’t that the fastest way to flatten an economy that is already down on its knees?

Kachikwu is selling this fraud euphemistically as price modulation when he and his government have not mustered the political will to deal with the quagmire that is the subsidy payments nor made arrangements to ensure constant supply at a stable and affordable price. In fact, the missionary zeal he is employing to sell this cockamamie idea is sickening. He needs to stop. He needs to get on the drawing board with his boss, President Muhammadu Buhari and come up with a real solution.

I know that many would speculate on the reasons why the government is curiously no longer looking at addressing the established problem of corruption in the subsidy payments systems, considering that this is Nigeria where historically it’s been a case of new termites just coming in to replace old termites while the nation-ripping enterprise goes on under some supposedly new national management. Yeah, that’s been the story of Nigeria so far, but if the Buhari government is truly serious about solving this problem, the starting point would be to shine the light on the fraudulent subsidy payments, so as to remove the corruption therein and retain it to serve the original purpose for which it is established, which is to provide some type of stability in price for Nigerians. Nigerians want to go about their daily lives and businesses knowing that the price of an important commodity like fuel would not be unpredictable like the British weather with government legitimising such instability in the name of price modulation. Amongst OPEC countries, Nigeria still sells petrol at the highest price to its citizens while it pays the lowest minimum wage and while also remaining the only OPEC country that regularly suffers from fuel scarcity. These are not problems created by market forces, but by human distortions propelled by corruption and a rent-seeking cabal that has from all indications taken our government hostage.

This whole thing is made desperately worse by the fact that Nigeria is a country without social safety nets and social security and in terms of any kind of social benefit, the subsidy is the only thing we can say Nigerians somehow enjoy. Yet, even that tangential enjoyment has been denied them by elements in government and the fuel importers who have corrupted the subsidy payments system, making it another racketeering enterprise and piling the cost on the ordinary consumer. The Buhari government that came to power on the back of a promise to change all that now seems at home with the corruption and would rather sell us the fraudulent idea of price modulation when all the corrupt factors influencing the price are still right there untouched! In other words, Kachikwu and Buhari want Nigerians to bear the cost of the corruption of the subsidy payments, which this government is evidently continuing in the form it was under previous governments. They want to do this by legitimising these corrupt payments under the notion of a price modulation regime. As a feint, they have been stridently trying to make a public case for the removal of subsidy when the real problem is not the subsidy itself, but the corruption therein. Now, that they think they have us where they want us with the scarcity clearly sucking out the people’s will to continue with whatever is the old system, they think they have found a huge wool to pull over the faces of Nigerians in the form of the terminology of price modulation as substitute for removal of subsidy.

Why this is so painful is that it needs not be so. If the government intends to do away with the subsidy policy, sure some of us would rub their face in the fact that some of them there now once opposed it; but after a day or two of harmless guffawing, wouldn’t we all soberly return to tackle the economic reality? Do we have to be lied to by policymakers paid by taxpayers to tell us the truth? Okay, you want to remove subsidy? Fine, let’s know what would replace it without costing the people an arm and a leg! Let’s know through extensive consultations what to expect and why whatever new you are proposing is better than where we are now. Nigerians can make sacrifices for Nigeria, but they shouldn’t be forced to make sacrifices for fellow Nigerians thieving them blind! Any government that does or encourages that would not be a government-properly-so-called, it would be a criminal enterprise masquerading as government!

Therefore, the Buhari government needs to step back from this suicidal mission it is embarking on with this game it’s playing with the fuel price. Some of us have always insisted that the solution is basic and one that must be addressed on two fronts. First, Buhari should work with the national legislature to once and for all pass the Petroleum Industry Bill (PIB) and mobilise the private sector to build new refineries and refurbish the existing ones to begin full internal refining of all our petrol needs. Secondly, while that is being done, he can put the searchlight on the subsidy payments and management system to get to the root of the scam. Also, while the latter is ongoing, the government can suspend all outstanding subsidy payments and payments for future supplies until the investigations are concluded and report made public, followed by public prosecutions and funds recovery and confiscation proceedings arising from such lawful legal processes where possible. Nigerians would understand if they are suffering shortages or scarcities as a result of genuine government efforts to tackle the corruption in the system, as far as they also see that there is corresponding work in the area of ensuring that local production is drastically increased to meet demands and cut down cost in order to boost the productive economy.

However, what the people will not stand is for a new government to lie to them about what to expect while giving a new name to the corruption in the system they are doing everything to cover up and benefit from at the expense of the people. They will not stand a government pretending to be finding honest solutions to a simple economic problem of demand and supply of a product that God has abundantly blessed our nation with, a product that others in our position have used to better the lot of their people without these government-created headaches that perennially bedevil us. Enough is enough!