CBN Governor Sanusi Lamido Sanusi
 

From Businessday.
Non-oil receipts of N589.98 billion fell below the proportionate budget estimate by 22.8 percent in the fourth quarter of 2012 and the receipts in the preceding quarter by 30.3 percent, the Central Bank of Nigeria (CBN) has said.

The decline in non-oil revenue relative to the preceding quarter, reflected, largely, in the drop in corporate taxes, Federal Government independent revenue and Customs and Excise duties during the review period.

As a percentage of projected fourth quarter 2012 nominal GDP, oil and non-oil revenue were 17.2 and 5.6 per cent, respectively.

On the other hand, gross oil receipts of N1,823.6 billion, which constituted 75.6 percent of the total, exceeded the proportionate 2012 budget estimate by 9.9 percent and the receipts in the corresponding period of 2011 by 151.2 percent, but declined by 5.8 percent below the receipts in the preceding quarter.

According to the CBN’s Economic Report for the fourth quarter of 2012, the rise in oil receipts relative to the proportionate budget estimate was attributed, largely, to the improvement in the receipts from petroleum profit tax, royalties and domestic crude oil and gas sales during the period.

Meanwhile, the gross federally-collected revenue of the sum of N1.313 billion (after accounting for all deductions and transfers) during the review quarter was transferred to the federation account for distribution among the three tiers of government and the 13.0 percent derivation fund.

The Federal Government received N620.75 billion, while the states and local governments received N314.85 billion and N242.74 billion, respectively. The balance of N135.33 billion went to the 13.0 percent derivation fund for distribution by the oil-producing states.

Also, the Federal Government received N26.47 billion from the VAT pool account, while the state and local governments received N88.24 billion and N61.77 billion, respectively.

In addition, the sum of N72.15 billion was drawn-down from the Excess Crude Account (ECA) to bridge the short-fall in revenue for the period and was shared as follows: federal (N33.07 billion), state (N16.77 billion), local governments (N12.93 billion) and oil producing states (N9.38 billion).

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Wikimedia Commons

The report is from the Businessinsider. 

WASHINGTON (AP) — Former U.S. Rep. Jesse Jackson Jr. was charged Friday with scheming to spend $750,000 in campaign funds on personal expenses. His wife was charged with filing false income tax forms.

Federal prosecutors filed a charge of conspiracy against the former congressman and charged his wife, Sandra, with one count of filing false joint federal income tax returns for the years 2006 through 2011. Both agreed to plead guilty in plea deals with federal prosecutors.

The charges represent a dramatic fall from political prominence for the couple. The son of a famed civil rights leader, Jackson entered Congress in 1995 and resigned last November. Sandi, as she's known, was a Chicago alderman, but resigned last month.

In a statement, the ex-congressman said, "I offer no excuses for my conduct, and I fully accept my responsibility for the improper decisions and mistakes I have made."

Jesse Jackson Jr.'s spending included $43,350 on a gold-plated, men's Rolex watch and $9,587.64 on children's furniture, according to court papers filed in the case.

"Defendant Jesse L. Jackson Jr., willingly and knowingly, used approximately $750,000 from the campaign's accounts for personal expenses" that benefited him and his co-conspirator, who was not named in the one-count criminal information filed in the case. The filing of a criminal information, rather than an indictment, ordinarily signifies that a defendant is preparing to plead guilty.

Tom Kirsch, an attorney for Jackson's wife says she has signed a plea agreement with federal prosecutors and would plead guilty to one tax count.

The charge against Sandi Jackson carries a maximum of three-year prison sentence. But Kirsch says the agreement "does not contemplate a sentence of that length."

___

Associated Press writer Michael Tarm in Chicago contributed to this report.

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Not too long ago, an advertisement for the position of Economist in a reputable organisation was started with "Wanted: A One-handed Economist."  

    If the advertisement had come in the wake of the international year of the disabled persons, the first impression one would have is that the organization was in sympathy with the programme and wanted to demonstrate its commitment to the success of the year. But, alas, it was far from that. Upon  reading the advertisement, it became obvious that the organization was not looking for an Economist with one of his hands severed from his body. What sort of Economist was actually needed? The organization in question was tired of the expression “on the one hand”… and on the other hand” that is very often found in some of the reports written by Economists in predicting the outcome of a given decision. What the Economist wanted should then be outright or thorough in analyzing a situation, but should be forthright in the advice proffered after the analysis – in short, no ambivalence.

   The advertisement referred to above reminds me of the fun which those outside the discipline of Economics often make of ceteris paribus. They say that no Economist’s ‘arsenal’ will be adequately equipped without the phrase ceteris paribus. I regarded the fun as inconsequential until I became jolted from my complacent position on the issue by the advertisement wanting a ‘one-handed’ economist whose economic model building should be sans ceteris paribus. You never can tell.

   A definition of the concept ceteris paribus will be necessary for us to rationalize whether or not an Economist worthy of the name could do without it. Professor M. P. Todaro, a Development Economist, in the glossary annexed to his book “Economics For A Developing World”, stated that ceteris paribus is a Latin expression widely used in Economics meaning ‘all else being equal’, i.e. all other variables are held constant.

   A discussion of this concept in isolation, that is, without making clear what the subject matter of Economics is all about would be some what incomprehensible, although many boast of knowing passable definition (from among various definitions) The reader is acquainted with, one crucial and all pervading point to note is the Economics is a social science. Being a science, it is academically expected that the approach to economic model building should not differ essentially from the methodology akin to scientific analysis, with its crucial assumption(s).

   Perhaps, an example will illustrate the point being made here. We all know that the quantity demanded of a normal commodity or good depends not only on the price of that commodity but also on myriad of other variables like past and present incomes, government policy, tastes, prices of close substitutes, population, weather condition (as in demand for ice cream or a bottle of coke), to mention only a few. Any changes in these independent variables would certainly affect the behavior of the dependent variable which in this case, is the quantity demanded. From the last statement, it can be inferred that the variables are inter-dependent. It would be patent to everyone that it is extremely difficult to quantify the specific influence of one independent variable, say price of one commodity in question on the dependent variable, especially when it is obvious that other factors are in the background and are changing.

   The Economist’s solution is invariably to accept these important variables within the model, but hold then constant, while the influence of a variable say, price is being considered. That is precisely where the use of the device commonly called ceteris paribus comes in very handy. Without this useful concept, Economists may be faced with a problem similar to that which a diner has to grapple with if he attempts to have a bite at two apples simultaneously; when it is customary to have two bites at an apple. His predicament is better imagined!

     But let us be frank. Is the idea of holding constant other factors (than just the one under consideration) peculiar to the field of Economics? The answer to this question is emphatic NO; the idea is universal and prevalent in all disciplines whose adherents to the path of science. For instance, in Biochemical analysis, the determination of the amount of chromophore formed from a biochemical reaction presupposes that the path length of the measuring medium must remain constant for a given set of same analysis (i.e. A=ECL).

    In passing, it should be noted that I have deliberately decided not to be quantitative in this article. I mused over this approach, and felt like reaching everybody including my friends who are always shying at any piece of writing with a bit of mathematics in it. By the way, this is another source of sarcastic remarks made about modern  Economists - the cynics say the growing craze is to mystify people with advent of Econometrics (humorously nicknamed the tricks of Economists).

    Concluding, I would like to submit that living as we do in a changing world, not a utopian one(with perhaps, univariate functions and possibilities) where one-handed Economists thrive, the expression ceteris paribus presents itself as a sine qua non (indispensable condition) in building any economic model of worth.

          CHRIS C. NWOBIKE retired from the department of Economics and Statistics, University of Benin.

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Columnist: Daniel, Uzoigwe Chimezie

In recent times, we have become used to the fact that our  graduates find it extremely difficult to participate in job selection interviews These graduates lose employment opportunities due to the back-aching requirements stipulated by employers of labour in their job advertisements.

Indeed, what is must disturbing is the discrimination against job seekers with grades in the field of study directly related to these vacancies. In essence, to graduate with a not-too-good certificate such as a third class degree virtually renders one unemployable in the nation’s labour market. In most cases, employers of labour do not bother to conduct practfical tests and interviews to evaluate the candidates. Rather, people with highly-rated certificates are given jobs outright while those who do not carry such certificates are not given the opportunity to prove their worth. In fact, basing the assessment and judgment of a graduate on mere paper qualification has become the rule rather than the exception. The society is already paying for this ugly development. Most of the products of our educational institutions parade mind-blowing certificates and degrees but are really half-baked and empty-headed. In fact, this ugly situation is partly responsible for the systemic failure in service delivery in all facets of our national economy. Moreover, due to undue emphasis on paper qualifications, our students, who have embraced indolence rather than hardwork are even readier to engage in shady and shoddy deals to obtain good degrees and certificates.

Recent studies have shown that students with poor degrees and certificates have excelled even better than those parading themselves with mind-blowing certificates. This is not surprising as good degrees and certificates have become major trade items in our so-called Ivory towers.

Regrettably too, many brilliant students with positive ideals and uncompromising stance have become victims of the bad eggs in our educational system. Hence, to a large extent, the so-called degrees and certificates have become elements of camouflage and do not represent the true personality and capability of most graduates.

To stem this ugly trend, standard examinations and interviews should be evenly conducted for all job seekers. Let as many as that are interested in a job, who has the necessary qualification, within the needed field of study be given the opportunity to prove their suitability for the position. Emphasis should be on skillfulness and competence. Anything contrary to this should be treated as counter-productive in the new spirit of transformation. Our Society is set on the path of destruction if it continues to favour masqueraders and 'paraders^’ of 'Oluwole certificates^’ as distinguished columnist, Mr Femi Adesina would prefer to put it.

Daniel, Uzoigwe Chimezie  is at present a final year Student of Economics and Statistics in the University of Benin. 07066223635.

E-mail: uzoigwechimezie92@yahoo.com. 

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Sourced from Mladiinfo. 

“What About Peace?” Competition for Youth

Deadline: 15 February
Open to: Young people between 14 and 20 years of age
Prize: More than $2500 total prizes offered to winners

Description

Global Exchange invites entries for What About Peace? Program 2013. Global Exchange is an international human rights organization dedicated to promoting social, economic and environmental justice around the world. This contest is to encourage high school age students to think about peace. Try using What About Peace? as a culminating project, an assignment, for extra credit or as a money-earning project for their group or class.

Contest

To take part in this contest, answer the question What about peace? in visual or written media.

• Telling a story (up to 500 words)
• Writing an essay (up to 500 words)
• Creating a poem (up to 200 words)
• Painting a picture or collage (up to 18” x 24”)
• Taking a photo (up to 11” x 14” on photo paper)
• Designing a graphic, poster or comic strip/cartoon (up to 18” x 24”)

Eligibility

• You must be between 14 and 20 years of age to participate.
• One entry per person… One person per entry.
• Entries won’t be returned. What About Peace ? has the right to use any and all entries on our website, in displays, and in publicity for the contest.  Copyright belongs to the entrant.
• Be sure that you and your teacher/sponsor understand our stance on copying and plagiarism.  They are not allowed.

How to enter the competition?

• Send your entry and the form to What About Peace ? at 2017 Mission Street, 2nd floor, San Francisco, CA 94110.
•  All entries must be received on or before February 15th.

Prizes

Prizes will be given in two categories: written (essay, poem, short story) and visual (painting, collage, photography and graphic).

• GRAND PRIZE is $1000 in any category
• First Place $300 each for the best written entry and $300 for best visual entry
• Second Place $150 in each category
• Sponsor/Teacher’s prizes $100 for Grand prize and first prize

The official website.

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Minister of State for Finance, Dr. Yerima Ngama

The news is from the Punch.
The Federal Government has allayed fears of any shock to the economy if the United States government decides not to buy crude oil from Nigeria.

The US had in recent times stored huge volume of crude oil, which it considered would be enough to sustain it for a long time.

The US is also considering reducing imports of crude oil in view of its harsh economic climate.

However, the Minister of State for Finance, Dr. Yerima Ngama, while briefing journalists shortly after the Federation Account Allocation Committee meeting on Thursday, said the Federal Government had before now anticipated the problem and was addressing it through the 2013 budget.

“The reason people have crisis is when anticipated occurrences are not taken care of. Such anticipated shocks in the economy have been taken care of in the 2013 budget,” he said.

The minister said such development was the reason for the establishment of the Excess Crude Account.

This, he said, would help to take care of the possible slowdown in the export of crude oil by the country.

“We don’t normally spend all our income. That is why we do not really spend all that we earn. We have taken the slight slowdown out of the budget,” Ngama said.

Asked how much was left in the ECA, he said, “What was left in the account as at the end of December was $9.24bn, but it was drawn down to $8.24bn. But it has risen again to $9.2bn.”

Meanwhile, the sum of N575.46bn was shared among the three tiers of government for the month of January, 2013.

A communiqué issued at the end of the meeting and signed by the Accountant General of the Federation, Mr. Jonah Otunla, stated that the total distributable revenue for the month of January was N575.4bn.

He said of the amount shared, the Federal Government got N216.5bn or 52.68 per cent; state governments, N109.8bn or 26.72 per cent; local governments, N84.66bn or 20.60 per cent; while N47.43bn was given to the oil producing states based on the 13 per cent derivation principle for oil and gas mineral revenue.

In addition, N65.29bn was shared by the three tiers of government as proceeds from the Value Added Tax, while N35.54bn was shared from the Subsidy Re-investment and Empowerment Programme.

Similarly, N651.26bn was realised as gross revenue for the month of January.

This was higher than the N581.05bn realised in December 2012 by N70.20bn.

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Photo: vanguardngr.com

The Nigerian lawmakers passed the motion on Thursday.
The House of Representatives on Thursday urged the Central Bank of Nigeria (CBN) to ban the use of foreign currencies for domestic transactions in Nigeria.
The resolution was sequel to a motion moved by Nadu Karibo (PDP-Bayelsa), which was unanimously adopted.
Leading the debate, Mr. Karibo said that there was a growing trend of using some foreign currencies, like the US dollar for the payment of school fees, hotel bills, real estate, rent and purchase in bars in the country.
He noted that the Naira was Nigeria’s currency and the only means of exchange for domestic transactions recognised by law in Nigeria.
According to him, the trend has led to a high demand of these currencies, especially the US dollars.
He said that this demand was contributing to the weakening of the Naira against such currencies with its resultant negative effects on the economy.
The legislator said that every country has its currency as a means of exchange, a symbol of identity and a sign of fiscal independence.
Samson Osagie (ACN-Edo) in his contribution said government must take responsibility for the abuse of the Naira and must ensure that it was stopped.
Arua Arunsi (PDP-Abia) said it was time the practise was stopped to encourage the local currency.
Aminu Suleiman (PDP-Kano), who spoke against the motion said, “I am not aware of anywhere in the country where foreign currencies were used for domestic transactions.”
Roker Jev (ACN-Benue) said, “Even if the motion is adopted by the House, it will not yield any meaningful result.”
Meanwhile, a motion that sought to ban the sale of alcohol and drug around motor parks in the country was rejected.
The rejection was sequel to a constitutional point of order raised by Samson Osagie (ACN-Edo), which was adopted by the House.
Mr. Osagie said that the Fourth Schedule of the 1999 constitution empowered state houses of assembly to legislate on motor parks.
The fourth schedule reads “(f) construction and maintenance of roads, streets, street lighting, drains and other public highways, parks, gardens, open spaces, or such public facilities as may be prescribed from time to time by the House of Assembly of a State.’’

(NAN)

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Professor Wole Soyinka

Placard-carrying protesters condemning waste of public funds on "First lady Mission House"

The story is from Saharareporters.

Nobel laureate Wole Soyinka today added his voice to a protest by Nigerian women who are outraged by the proposed allocation of N4 billion in public funds to build a so-called “Mission House” in Abuja for Nigeria’s First Lady, Patience Jonathan.

Mr. Soyinka, one of the world’s most outspoken writers, registered his outrage in the form of a Valentine’s Day message addressed to Mrs. Jonathan.

Numerous Nigerians, among them Nigerian women who organized a protest march, have condemned the spending of such a colossal sum on the ego-driven, wasteful project of President Goodluck Jonathan’s wife. Mr. Soyinka’s message is meant to be delivered to Mr. Jonathan alongside other letters by protesting women.

The professor of literature called on spouses of all Presidents of African Nations to dissociate themselves from the
proposal to squander billions of naira on a selfish project Nigeria’s First Lady is set to embark on.

Mr. Soyinka’s letter is reproduced below:

A St. Valentine’s Day Card on the Occasion of Women’s March Against Connubial Corruption.

A Valentine Day Message should be brief, so I must plead for understanding for this departure from the norm. In any case, I deplore the slavish adoption of foreign saints of whatever shade, color, or religious persuasion. However, the coincidence of dates for women’s intervention in yet another egregious conspiracy to drain the Nigerian treasury, mounted in the name of a high-flying member of your gender,
strikes me as a call to break the mould and submit myself to the call of Saint Valentine.

A Yoruba proverb goes thus: Ti a ba ma a j’opolo, ka je eyi to l’eyin. (If one must eat a toad, then go for an egg-bloated one). If I must send a Valentine card for the first time in my life, then let me do so on a grand scale. I have therefore elected not to lend my affection to any one individual, but the entire bevy of First Ladies
of the African continent – and that includes First Male Spouses. What, after all, is to stop these male consorts from developing ‘pet projects’ and setting up Missions? Even if they number no more than one or two, there is a saying that goes: What is sauce for the goose is also sauce for the gander.

A mind-boggling fiscal misappropriation – Four Billion Naira, no less! - is being attempted in your names – openly, in an attempt to institutionalize an illegality through a debasement of the democratic process. It is no longer secretive but in-your-face, and damn public opinion!  Your names have been invoked as the ultimate beneficiaries, and thus, you are vicariously implicated. In the name of St.
Valentine and the love I bear for you all, please dissociate yourself from this display of shameless avarice. I shall not go so far as to ask you to denounce what you probably know nothing about, but if you ever get to hear of it, distance yourselves from the gross impropriety. I implore you in the name of all local equivalents of St. Valentine: continue to serve humanity within and outside your borders, but without self-interest. Assist this nation in crushing the increasing acquisitive impudence of individuals and institutions that do not exist in our constitution, yet insist on fattening on national resources.

The enthronement of vulgar preening and opportunistic consumption is complicating the battle of a principled minority on critical social issues. It gets in the way of sanitizing society, and has become an expensive distraction. When you visit in your personal and/or professional capacities, or as consorts to your spouses, we would love to love you, respect and honor you. It will be painful to watch you dodging a rain of rotten eggs and tomatoes in place of flower petals and bouquets.  There is no such thing as an African First Ladies Mission in the Nigerian appropriation list. Any claim remotely like it is the conspiracy of sycophants, jobbers, masters of impunity, a desperate clique that unfurls a continental umbrella as cover for private aggrandizement. Please, do not be a part of it. The people of this nation are fast losing patience.

Yours in unstinting love, this St. Valentine’s Day of Two Thousand and Thirteen, Wole SOYINKA (A Public Service Retiree)

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Minister of State, Finance Yerima Ngama

From the punch
The Federal Government has so far uncovered 45,000 ghost workers in its bid to eliminate waste in its expenditure.

Minister of State, Finance, Dr. Yerima Ngama, said this on Wednesday while briefing journalists on the outcome of the weekly Federal Executive Council presided over by President Goodluck Jonathan.

He briefed State House correspondents alongside the Minister of Information, Mr. Labaran Maku, and the Minister of Foreign Affairs, Ambassador Olugbenga Ashiru.

Ngama and Ashiru had earlier briefed the FEC of their ministries’ achievements and challenges in 2012.

Ngama said the ghost workers were uncovered in 215  Ministries, Departments and Agencies where his ministry had already introduced the Integrated Payroll and Personnel Information System.

Under the scheme, he said 153,019 members of staff had so far been audited as at January 2013.

With the discovery, he said about N100bn was already being saved in form of salary bill.

He added that efforts were being made to continue the exercise in the remaining 321 MDAs with a view to identifying other ghost workers still in the system.

He said the government’s decision was one of the ways of rationalising the nation’s recurrent expenditure.

Ngama said the major problem that distorted current expenditure in the country was the across-the-board increase in salary in 2010.

Ngama regretted that although the Federal Government succeeded in breaking the budget jinx by sending the 2013 Appropriation Bill to the National Assembly last September, it had yet to be signed into law.

He said, “This year, we have broken the budget jinx. We were able to submit the budget in  record time in September and it was passed on December 20, 2012.

“They (members of the National Assembly) have returned the document to us. We have some few things to sort out before it is signed.”

The minister said in all, the Federal Government had managed the nation’s economy well to the extent that it was attracting more foreign investors daily.

Maku said Jonathan, during the FEC, set up an inter-ministerial committee to go round the world and take inventory of Federal Government’s assets abroad that the government needs to work on to add value.

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NYSC Director-General, Brig. General Nnamdi Okore-Affia
| 

as published by the Punch

The National Youth Service Corps on Wednesday said  only eligible graduates, who pass through duly accredited, full-time courses from higher institutions, would be mobilised for participation in the forthcoming 2013 Batch ‘A’ scheme, scheduled for between March 6 and 26.

Already, the NYSC has started collaborating with relevant regulatory organisations of corps producing institutions, such as the National Universities Commission for universities and degree-awarding institutions, and the National Board for Technical Education for monotechnics/polytechnics and the Joint Admissions and Matriculation Board.

A statement bythe Director-General of the NYSC, Brig. General Nnamdi Okorie-Affia, in Abuja said any prospective corps member, whose admission status was not known to JAMB, would be deemed to have been improperly admitted.

He said, “Accordingly, the data of all prospective corps members, as submitted for mobilisation by their respective institutions, are subjected to screening for conformity with the requirements of these regulatory/examination bodies.

“In this regard, all prospective corps members whose admissions are not known to JAMB will be deemed to be improperly admitted. The admission status of such students will require the affected CPIs to regularise same with JAMB. Similarly, all CPIs have been advised to abide by the  extant admission quota approved by the NUC and NBTE respectively in making submission for mobilisation.

“Any submission in excess of quotas approved will not be accepted.  Graduates of courses not duly accredited by these regulatory bodies will not be mobilised for service.”

The NYSC noted that “the regularisation of admissions with JAMB is the duty of the CPIs; the confirmation of approved admission quota for each course and the determination of their accreditation status is the prerogative of the regulatory bodies – NUC and NBTE”.

Okorie-Affia added, “It is imperative to state that the NYSC will not act as a liaison office between the CPIs and these regulatory/examination bodies.”

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Culled from omojuwa.com

You gotta be living in Mars not to have smelt the putrid dust kicked in the air by the spat between the two teams that have ruled, some say ruined, the Nigerian nation for much of the last decade and half.

In one corner are the lieutenants of former President Olusegun Obasanjo. In the red corner, bloodied but still swinging, are the colonels of President Goodluck Jonathan.

Now, in most cultures, a political fight over underachievement is a good thing because the competition for the hearts of the citizens leads to betterment in the standards of living of the people. The problem though is that in this instance it’s like the house of PDP tearing itself new holes. A big danger when you realize that the opposition is also coming together, maybe a dozen years later than it should have.

In the whole mudslinging, no one has spared a thought for tomorrow’s children or today’s heroes. In the period when yesterday and today’s men and women of power were busy displaying their failed records, the Nigerian Super Eagles were quietly doing what no one expected – marching to an improbably African title after nineteen barren years and a tournament removed from the indignity of not even qualifying for the championship.

I must confess that I, like many optimistic Nigerian supporters, thought the Eagles had a chance of making the last 4. But, after a lackluster group stage that threw Ivory Coast in our path, I knew the elephants would eat us alive. But, then I forgot the Stephen Keshi factor. I first met Keshi as a pimpled, teenage newspaper intern about twenty-one years ago and the first thing that struck me about him was his charismatic nature. I thought the man was made for American politics.

But, when he was appointed the national head coach, I gave him eighteen months to last in the job. You see, Keshi is a forceful leader that bleeds Nigeria through and through. The last time I spoke with him on the phone a few years ago in company of my late friend, Sunday Orelesi, all he talked about was how to get Nigeria back on top. And, of course, encouraging us to do it in our own ways too.

I was sure the Nigerian football federation who never really wanted Keshi in the first instance would wait for him to meet his waterloo at the African Cup of Nations, if he qualifies, then let all of Nigerians know that the future was sitting at home in an European town and looking for suckers in Africa to employ him.

Clearly evident in the victory of the Eagles was one thing – the undeniable spirit of the average Nigerian to succeed against all odds. It seems all the Nigerian need is a chance and he will fly. For every Nigerians dragging the name of the country in the mud overseas, there are hundreds quietly making Nigeria proud.

Here were the Eagles, long derided as Super chickens going to the African Cup of Nations with a baggage in the person of its head coach, a man whose handicap is that he’s a Nigerian working for his country. That is not supposed to happen. The job of the Eagles head coach is reserved for European journeymen trying to make a quick buck. It’s a job for men who can cut deals with the lords of Nigerian football.

You find a lot of this in the Nigerian life today. In my frequent jaunts into Nigeria, I have been shocked at how much of the country has been taken over by foreigners with very little qualifications and pedigree.  They lord their power over hapless Nigerians who are busy selling out their fellow citizens just to eat the few crumbs falling from the tables of the foreigners they are much qualified than.

Foreign investment in an economy is a great thing. It means the country’s economy is growing. This is what happens in foreign countries with aspirations to grow. My partners and I were developing a film project once that would involve themes that were American, Nigerian and Chinese. It seemed like a great concept until I found out how tough it is to take profits out of China. It seemed the Chinese sensibly have decided that in order to grow their film industry and economy, they would have to inject profits back into the industry.

Back in Nigeria, what you see is the opposite. Profits are being carted out of the country with ignominy, often with the collaboration of yesterday and today’s men.  The boards of Nigerian companies are stacked with these men and women who invariably help the country take one step forward and five backwards in economy development.

But, the ordinary, long suffering Nigeria just soldiers on. One of the great things in the political power play is that when daddy and mummy fights, the kids tend to have a window of opportunity to stretch their muscles. It’s a little window because you know mummy and daddy will close ranks again, just as all the noisemakers of today will close ranks ahead of the next elections.

But, there is a Keshi in all of us waiting to be unleashed. If only the government will give Nigerians a chance to soar. We would not only be the giants of Africa again. We could be kings of the world.



- Ose Oyamendan

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See the Guardian.
• Benedict cites old age, steps down Feb. 28

• New Pontiff emerges before March 31

IT was a stunning decision that was made more dramatic because of its unexpectedness: Pope Benedict XVI’s announcement Monday that he would resign.

The 85-year-old Pope, who served the notice just two days to Ash Wednesday, the traditional start of 40 days fasting by his one billion faithful worldwide, leading to Easter, cited old age for his resignation. This is happening for the first time in about 600 years when a similar step was taken by Pope Gregory XII in 1415.

The development paved the way for bookmakers yesterday to tip Peter Turkson of Ghana and Marc Ouellet of Canada as among the cardinals likely to take over from Pope Benedict XVI.

The German-born Pope said he would step down on February 28, which will make him the first Pontiff to resign in centuries.

“I have come to the certainty that my strengths, due to an advanced age, are no longer suited to an adequate exercise of the Petrine ministry,” the Pope said in a speech delivered in Latin at a meeting of cardinals in the Vatican.

Dressed in red vestments and his voice barely audible as he read from a written text, the Pope made the announcement in a hall in his residence  - the Apostolic Palace next to St. Peter’s Square.

Vatican spokesman, Federico Lombardi, said he expected a conclave of cardinals to be held in March within 15 or 20 days of the resignation and a new Pope elected before Easter Sunday on March 31.

Benedict, an academic theologian who has written numerous books, including a trilogy on the life of Jesus Christ that he completed last Christmas, will retire to a monastery within the Vatican walls.

“In order to govern the ship of Saint Peter and proclaim the Gospel, both strength of mind and body are necessary, strength which in the last few months, has deteriorated in me to the extent that I have had to recognise my incapacity to adequately fulfil the ministry entrusted to me,” the Pope said.

“For this reason, and well aware of the seriousness of this act, with full freedom, I declare that I renounce the ministry of Bishop of Rome, Successor of Saint Peter, entrusted to me by the Cardinals on April 19, 2005, in such a way, that as from February 28, 2013 at 20:00 hours (1900 GMT), the See of Rome, the See of Saint Peter, will be vacant and a Conclave to elect the new Supreme Pontiff will have to be convoked,” he said.

Tributes poured in for Benedict from around the world, including his native Germany where Chancellor Angela Merkel said she had the “greatest respect” for his decision, and hailed him as “one of the most significant religious thinkers of our time.”

French President Francois Hollande said the Pope’s decision was “eminently respectable.”

British Prime Minister David Cameron said the Pope had worked “tirelessly” to boost ties with Britain.

Benedict, formerly Joseph Ratzinger, was the Catholic Church’s doctrinal enforcer for many years and earned the nickname “God’s Rottweiler.”

He was elected in 2005.

The guiding principle of his papacy has been to reinvigorate the Catholic faith, particularly among young people and in countries with rising levels of secularism like Europe and North America.

Benedict has championed Christianity’s European roots and showed his conservatism by repeatedly stressing family values and fiercely opposing abortion, euthanasia and gay marriage.

Pope Benedict, who has looked increasingly weary in recent months and often has to use a mobile platform to move around St. Peter’s Basilica during church services, had hinted in a book of interviews in 2010 that he might resign if he felt he was no longer able to carry out his duties.

The scandal over confidential memos leaked from the Vatican by the Pope’s once loyal butler last year was a particularly hard blow for the Pope.

“The Pope caught us a bit by surprise,” Vatican spokesman, Federico Lombardi, said at a hastily-arranged press conference.

Lombardi stressed that the Pope’s decision was his own and was “well thought out” and that “there is no illness that has contributed to it.”

He said the Pope had chosen a consistory to make his announcement because it would group cardinals together, adding that most of them had not been informed of the Pope’s announcement beforehand.

The only other Pope to resign because he felt unable to fulfil his duties was Celestine V in 1294, a hermit who stepped down after just a few months in office, saying he yearned for a simpler life and was not physically capable for the office.

In 1415, Gregory XII resigned in a bid to end the “Western Schism”, when two rival claimants declared themselves pope in Pisa and Avignon and threatened to tear apart Roman Catholicism.

Other popes have stepped down for a variety of reasons in the papacy’s mediaeval history.

A quarter of the cardinals that can elect a new pope are Italian.     The last non-Italian Pope before Benedict, who is a German, and his Polish predecessor John Paul II was Adrian VI, who died in     1523.

Turkson, the head of the Pontifical Council for Justice and Peace who is considered a progressive candidate, is among 18 Africans in the Vatican’s College of Cardinals.

Ouellet, a respected theologian who heads up the world’s bishops and is seen as a “modern conservative”, has also been frequently named in Vatican circles as a possible successor to Benedict.

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The story is in the The Guardian.
•  Sanusi insists on interest rate benchmark

WITH an average of seven per cent growth rate of the Gross Domestic Product (GDP) consistently for the past 10 years, the nation’s economy is on the path to more development, according to the Minister of Finance and Co-ordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala.

The minister said that the existing growth was in contrast with an average of 2.4 per cent recorded over the previous 10 years.

She also said that the existing administration had succeeded in reducing the recurrent expenditure in the 2013 fiscal plan to 68 per cent, against 71 per cent of the 2012, and that plans were under way to bridge the widening gap of inequality in income distribution.

On Monday too, the Governor of the Central Bank of Nigeria (CBN), Malam Lamido Sanusi, said that no amount of criticism could make the Monetary Policy Committee to change its mind on the nation’s interest rate benchmark of 12 per cent, except this was necessary.

He said that the committee was not in a hurry and that nobody should be in a hurry too, adding that it was still monitoring the developments to be satisfied with the need for and possible change.

Both the minister and Sanusi made the disclosure at the fourth yearly Investors’ Conference of the Renaissance Capital in Lagos yesterday.

According to the minister, the time has come for the nation to admit its shortcomings, which continue to stare it in the face, while proactively seeking ways to overcome them.

She noted that unemployment which was put at over 23 per cent and rising underemployment in the formal sector and inequality - uneven distribution of wealth and widening gap between the haves and have-nots - had become a national worry and weekly “agenda at the Federal Executive Council meeting.”

“We are not minimising our challenges. What we are saying is that the present administration is worried about the issues and working hard to fix them. Some of our challenges are global in nature, even the United States (U.S.) and Europe are going through them now.

“Nigeria is an exciting country to be in. While some are looking at the challenges, others are seeing opportunities from the challenges. Nigeria’s economy is resilient despite the challenges and that is why it maintained the growth record all these years,” she said.

According to her, “the new strategy included ensuring the fiscal consolidation and growth. This means that there will be less borrowing, increased spending and investments into areas of challenge. Our target is to reduce recurrent expenditure to 65 or 60 per cent by 2015 and plans are being perfected.

“IMF has just concluded its Article IV and the report in debt dynamics for the country was positive. The debt to GDP is at 20 per cent, though high, but it is above global standard.

“There are also plans to establish a source of long-term capital. So, plans are under way for the establishment of a development financing institution, with private sector and multilateral organisations participating.

“Reforming the mortgage sector is also top priority. The World Bank is in partnership with Nigeria and has given $300 million pledge for its take-off. The mortgage sector would offer huge employment opportunities.”

On his part, Sanusi said: “It is very easy to take financial and economic stability for granted, especially when there is seeming stability in the financial system. Even with low rate at this point, banks may still not be able to lend.

“There are structural issues that necessitated the decision. Banks cannot lend even at low rate with poor power supply, which would not guarantee stable operations. Unemployment is still high and no bank would want to lend to people without stable jobs and stream of income,” he said.

He explained that the cash-less project was a combination of other institutions - the telecommunications and the National Communications Commission, hence their ineffectiveness would also affect the project.

Sanusi also decried the nation’s dependence on oil, noting that the existing global view of oil may not be healthy for the economic sustainability of the country.

“Agriculture and power sector development is the game changer for the economy. It will ensure equitable income distribution. All we need to do is to develop the sector for better results.

“Nigeria is the largest cassava producer in the world, but the problem lies in the development of the value chain. We produce tomato in the country, but we remain the highest importer of tomato paste. The value is capable of creating the job opportunities that unemployed people are looking for,” he added.

Earlier, the Chief Executive Officer of Renaissance Capital, West Africa, Yvonne Ike, said that “there is a phenomenal growth revolution in Africa and Nigeria is at the forefront.”

Ike reeled out the challenges facing the continent and the country, including infrastructure, illiteracy, corruption and security, saying that the continent and the country had defied these odds to beat the global record in growth terms.

“Nigeria is a resilient economy. MTN Nigeria came into the country in 2002 amid infrastructure challenges. It was  not  long, it started declaring profits in millions. GZI, a  can-manufacturing company, started with a total asset worth $14 million. Last year, the company was bought at over $400 million. Banks are rebounding after the reforms, with some declaring huge profits.

“If government can raise 1,000 mega watts of power, the nation’s GDP will rise by 50 basis point in one year. We believe that Nigeria is leading the change in Africa and that is why we are committed to the capital market development.

“The investors cannot wait until everything is fixed, because they can bring the change by their activities. The economy is still growing despite the challenges and leading other world economies in growth. The truth is that the government has taken many steps to address these problems,” she added.

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From the The Guardian.
TUNDE, Uche, Ejiro, Ahmed, Omo, Ade and Ngozi are all between the ages of 24 and 35 years. Only three of them have a job, and even then they are still sending out their resume and attending any available interview in the hope of landing better paying ones. Two of them are doing a Master’s degree programme, while one is about rounding off his PhD programme.

Some still get pocket money from their parents, and from relatives who helped sponsor them in school. None of them is married. None of them has children. Some are putting up with friends, while the others live with their parents and relatives.

Thirty years ago, people like these did not exist. Before them, the average age for a Nigerian woman to get married was 20, and for men 25. As Lev Grossman asked in TIME magazine, “What are they waiting for? Who are these permanent adolescents, these 20 and 30 something Peter Pans? And why can’t they grow up?” In that thought-provoking issue, Grossman went on, “Everybody knows a few of them – full grown men and women who still live with their parents. This isn’t just a trend, a temporary fad or a generational hiccup. This is a much larger phenomenon, of a different kind and a different order.”

In the past, people went from childhood to adolescence and from adolescence to adulthood, but today there is a new, forced, intermediate phase as you go along the way. It is a new and separate life stage - a strange, intermediate never-never land between adolescence and adulthood in which people hang on for a few extra years, putting off the weight of adult responsibility. “They’re betwixt and between. You could call them twixters.”

For Nigeria, it could be that for this generation, their parents, who seem not to be complaining, are still in some sort of late phase honeymoon from vestiges of the oil boom. Their parents and the older generation who had things easy and indeed, who really enjoyed the oil boom themselves, can cut them some slack.

I am sure these ones will recall with nostalgia when the Nigerian naira could measure favourably with the American dollar; when you graduate you were sure of a job, a car loan and decent housing; when going overseas was not to escape hardship, but for educational and life experience; when Nigerians were respected abroad, and not seen as cons or corrupt people; when going to public schools meant value and dignity; when in Nigerian homes people could afford on a daily basis almost all Nigerian newspapers; when life was living, and living was life.

But based on natural progression, if Nigeria is to move forward, it has to be on those who have more years to live. Nigeria’s place in the foreseeable future rests squarely on the younger ones. They have to get on. But I am worried that this generation of Nigerian youths is not growing up because it can’t. All the economic, social and cultural wherewithal that usually help people grow from dependant to independent are no longer there. The Nigeria of today will not let Nigerian youths live their dreams.

In the past, when you enter a four-year programme in a university, it is a four-year programme. But nowadays industrial action by university academics and sometimes non-academics has made graduation date unpredictable. And upon graduation, there is no job waiting. To improve their employability, some go back to school to acquire higher degrees. But adding degrees after degrees costs precious time and money and further pushes adulthood into the future. Even with that, there is no guarantee that with these higher degrees the person will get a job.

Now, because many Nigerians are acquiring higher certificates, there has been a relative reduction in the value of degrees and diplomas. The last JAMB/UTME, 1.5 million people wrote it, seeking for few available spaces, while in the past people were encouraged with scholarships to go to university. The value of wages has as well depreciated. Most jobs available are the low-paying jobs where the take home on average for a graduate is N50, 000. Even then, most companies prefer those with OND, who they can pay even ridiculously lower still, stacking the cards even more against university graduates.

How far can that go when you factor in that a two-bedroom flat on average, depending on location, ranges from N250, 000 to N450, 000? And most Lagos landlords will still want you to pay at least a year and half rent, if not two or three years, with agency and agreement fees, never minding the new Lagos tenancy law. Transport fare is there, you have to pay the national electricity provider, PHCN, and, yes, money to fuel generator. Forget a car. You have to feed, you have to wear clothes. Even the minimum wage of N18, 000 government is reluctant to pay can go nowhere.

So, when you discuss marriage with such a person, as my dad used to say then, “he will parry your punches.” And as this generation marries late, it also means that they tend to have more sexual partners than previous generations. They are more prone to sexually transmitted diseases, including HIV. Yet, in Nigeria, paper qualification matters a great deal. But today a degree only places you where blue-collar people of the same age were 30 or 40 years ago.

Even then, the transition to adulthood gets tougher the lower you go on the educational and economic ladder. Companies and industries should increase exponentially with the increased turnover of skilled manpower. Instead, many are folding up, and many still are relocating to neighbouring countries. The increased number of graduates that should be an asset has been made a liability. And what should be strength has been made a weakness.

Furthermore, Nigerian government pays lip service to issues concerning its youths, and will not let them have a voice. Any sort of programme that government says is for the youth is usually paternalistic, anachronistic and hypocritical, another avenue to enrich themselves. For them, young people are objects rather than resources. If they are not used as political thugs, they are killed serving their fatherland. What hope for the youths whose society seems to suffer from ephebiphobia and adultism?

The adults have remained agents of youth suppression, and have systemically denied them economic power. Till today, there are many old men and women, who are on pension and have continually denied the younger ones job opportunities because, after normally retiring from active service, they have remained in the system on contracts, which they renew yearly. In politics, it is still the same old people that are recycled - spent forces that have their greedy paws on political appointments, committees and boards. Only death or incapacitation can wrench these off them.

But this should not be so. Inter-generational equity should be the norm. For Nigeria to achieve greatness, it must harness the great potential of her youths, who are indeed her future. The government and society must understand that they are morally responsible for helping the youths find their bearing. There should be jobs, social security, mentoring and easy access to credit at low interest rates. Indeed, it will take a society that strives for social justice; indeed, it will take leadership that sees the promise of the future!

• Dr. Odoemena, a medical practitioner, wrote from Lagos.

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See it also at Businessinsider.

Jason previously founded Smart Bear Software and co-founded ITWatchdogs, both of which were bootstrapped to profitability, grew to millions in revenue, and were sold. He is a mentor at Capital Factory (like TechStars or Y-Combinator in Austin) and the co-host of OnStartups Answers along with Dharmesh Shah. Jason podcasts and blogs about startups and marketing on A Smart Bear and also has recently co-founded his newest startup WP Engine.

Q: You’ve founded 4 startups that all have profited over $1M in revenue, which includes Smart Bear, and your new startup WPEngine. One of your key ingredients to Smart Bear’s results was that profit was behind every choice you made. Can you tell us of an instance where this concept shouldn’t be applied when starting up?

I think startups should always be cognizant of how to be profitable in the long run. Even Jeff Bezos who famously runs a $57B/yr business at essentially zero profit margin is doing so, in his own words, to maximize long-term free cash flow per share. Which is big-business accounting speak for “throwing off tons of cash in the long run, but reinvesting for growth and strength in the short run.”

That’s how a growing startup who isn’t focused on profit should also be thinking. Sure you’re pouring money into growth and removing risk, but to what end? Too many startups decide they’ll “figure out how to make money later,” and then don’t, or at least, don’t figure out how to make enough.

Q: What was the best advice you’ve received about managing your time?

The single most important concept is to do one thing at a time. Multitasking for a human is always strictly less efficient, just as multi-tasking on a CPU is less efficient. You think you’re filling in the minor time gaps with something useful, but your just distracting your brain and preventing yourself from having even a smidgen of recharge time. You think you’re being “real-time and responsive” but you’re really just making noise and not generating something of value.

If you process email just one an hour, or three times a day, you’ll see how fantastically more efficient you are at email, and how much more you get done outside of email. And the same is true with any other normally-interruptive task.

Q: What challenges did you face when trying to determine the lifetime value of users for WP Engine early on? How did you solve that problem?

It’s actually pretty easy.

Early on you can’t use any of the typical formulas like “1/c” lifetime months where “c” is “monthly cancellation rate,” because you don’t have enough customers or enough time passing to get an accurate idea of “c.” You can do cohort analysis but there again you just don’t have enough quantity of customer to know anything.

So, just assume the customer stays for 24 months. Why? If your company has good retention it should be much longer than that, but being conservative now is good because you’ll have plenty of ups and downs in marketing spend and in customer retention so let’s not assume you’ll be awesome right out of the gate, consistently for the next three years.

If your company has a bad retention rate, of course that’s not just bad financially, it also means something is fundamentally rotten in your business, either in bad service, a useless service, a service people won’t pay for, or a service people don’t actually need for a long time. Any of those problems are far more critical — in fact, likely fatal — compared to calculating your LTV.

Q: A lot of bootstrap startups get to a point where they see traction in their growth and are faced with the decision of continuing or trying to raise capital. What would you advise an entrepreneur in this position?

As cheesy as it sounds, it completely depends on what the founder wants from life. I used to write graphics routines in assembly, so believe me I wouldn’t say something cheesy unless I really thought it was true.

Do you want to build a huge company? Do you want to “make a mark on the world?” Do you want to stick with one thing for as long as possible, maybe a decade? Do you want to trade your baby in for money? Do you want to shift away from what you’re doing today (whether that’s writing code, designing the website, selling the customers) and into managing teams of people who are actually doing the real work, and then managing managers, and hiring and managing executives who themselves are responsible for strategy, growth, hiring, culture, metrics, evaluations, etc within their own departments, and managing your board of directors and CFO and HR director and all the other things which a CEO of a growing, funded company must do?

If the answer to all that is “hell yes, that sounds amazing,” and of course if the business itself lends itself to raising money (i.e. traction and growth in a large and growing market), then raising money is your best shot at all those things. It gives you the fuel and time to actualize that journey.

If the answer to that is “hell no, that sounds like hell on Earth,” then don’t set yourself up for the inevitable. Don’t get too large, or get someone else to be the CEO (who you trust…. hmmm), and keep control of your own destiny.

There are not right and wrong choices. I’ve done both of these things and had a great time with both of them. The only mistake is to not choose — try to straddle the path — or to choose the path which ultimately will not make you happy or fulfilled.

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BACKGROUND TO THE ESSAY

Nigeria is the largest producer of Petroleum in Africa and the sixth largest OPEC producer with proved reserves of more than 23 billion barrels. Nigeria's proven oil reserves are estimated by the U.S. United States Energy Information Administration (EIA) at between 16 and 22 billion barrels (3.5×109 m3) but other sources claim there could be as much as 35.3 billion barrels (5.61×109m3). Its reserves make Nigeria the tenth most petroleum-rich nation, and the most affluent in Africa (US E.I.A 1997). However, as oil prospecting continues in the Lake Chad basin and with new discoveries along the Anambra-Kogi basin, Nigeria’s proved and probable reserves are expected to be reviewed upwards. Over the years, the structure of the Nigerian economy had evolved to position the petroleum sector as the mainstay of the economy. The Petroleum industry currently accounts for more than 95% of the country’s foreign export earnings, over 80% of government revenue according to the International Monetary Fund (IMF) (EIA, 2012). The Petroleum sector also contributes well over 20% of the nation’s Gross Domestic Product. Econometric simulations (Iyoha (1995), Orubu (2003)) had established a strong linkage between the value of Nigeria’s oil export earnings and her economic performance. Following this, Scholars including Oriakhi (2003) have argued that oil in the next 20 years or so will continue as an independent variable in the economic growth and development of Nigeria. Not only is petroleum economically relevant, it remains a strategic national product providing the internal energy requirements of the country for both domestic and industrial use.

There are many products as well as by-products of Nigerian Crude including but not limited to the Premium Motor Spirit (PMS) commonly known as petrol, Automotive Gas Oil (AGO) commonly known as diesel fuel, and Dual Purpose Kerosene (DPK) for household and aviation uses (Orubu, 2003).

Minister of Petroleum Resources Diezani Alison Madueke

PETROLEUM PRODUCT PRICING AND ADMINISTRATION IN NIGERIA

Nigeria is a Country with a very high demand for all categories of petroleum products. Although figures vary, official sources show average demands are put at: PMS 30-33million litres per day; AGO  12million/d; Kerosene 10million/d; and ATK (Aviation Turbine Kerosene commonly known as aviation fuel) 1.6million -3million/d depending on the season (Vanguard, January 26, 2011).  Nigeria also consumes a high level of both Automotive Gas Oil (AGO) and the Dual Purpose Kerosene (DPK). The Ministry of Petroleum Resources (MPR) remains the overall coach of the Nigerian Petroleum industry with the Nigerian National Petroleum Corporation (NNPC) under the MPR serving as an industry operator and a direct handler of government interests in the sector. However, the NNPC first existed as the Nigerian National Oil Corporation (NNOC) which was established in 1971 (Orubu, 2003). The NNOC was established to strengthen Nigeria’s control over the petroleum industry (In view of the activities of powerful Oil Multi-National Corporations) and given responsibility for both up-stream and downstream activities in the sector. The NNOC also looked after Government’s participation in the activities of the oil companies. Before 1977, the Ministry of Petroleum Resources (which also had regulatory functions) operated side-by-side with the NNOC. That year, they were merged to form the Nigerian National Petroleum Corporation (NNPC). The NNPC combined the commercial functions of the defunct NNOC (that is, exploration, production, transportation, processing of oil, refining and marketing of crude oil and its refined products) with the regulatory functions formerly exercised by the Ministry of Petroleum Resources (National Bureau of Statistics, 2010). In March 1988, the NNPC was declared a commercial, integrated international oil company whose functions were to explore, develop,produce, process and market crude and refined petroleum, its by-products and derivatives at internationally-competitive prices in Nigeria and abroad.

Today, the NNPC has many subsidiaries but it is the Petroleum Products Pricing and Regulatory Agency (PPPRA) that was established in 2003 to determine the pricing of Petroleum Products and to regulate the supply and distribution of petroleum products (PPPRA 2013). The PPPRA is supposed to work in conjunction with other subsidiaries of NNPC to attain a strong, vibrant downstream sub-sector of the petroleum industry, where refining, supply, and distribution of petroleum products are self-financing and self-sustaining.

 THE WOBBLING STATE OF THE DOWNSTREAM PETROLEUM SUB-SECTOR

After about 56 years of commercial oil exploration and production (E&P), it could be argued that the upstream sub-sector of the Nigerian petroleum industry has been moderately successful owing largely to the massive investment of Oil Multi-National Corporations (OMNCs). Oil exploration and production (E&P) which is the source of crude oil has immensely contributed to Nigeria’s economic growth by serving as a major source of revenue and foreign exchange.

But this is probably where the good news ends for the Nigerian Petroleum industry. The downstream sub-sector of the industry which comprises of Refining (although sometimes placed under the so-called mid-stream sub-sector), Distribution and Marketing could best be described to be in a wobbling state. This is as a result of the high level of inefficiency in the sub-sector in terms of low value addition on crude oil.

The fact that bulk of Nigeria’s crude oil is refined abroad is a pointer to this fact. Although, Nigeria has about four Refineries including the old Port-Harcourt Refinery (1965), the Warri Refinery (1978) , the Kaduna Refinery (1980) and the new Port-Harcourt Refinery (1987) but these Refineries are functioning at sub-optimal capacity and the country continues to spend substantial foreign exchange to import fuels for domestic consumption (Orubu, 2003).

THE RESULTANT IMPORTATION PRICING POLICY

Domestic refining in Nigeria cannot meet up with domestic consumption so Nigeria resorts to importation of refined crude – This is actually the tragedy of the story of the petroleum industry. According to NNPC sources, Nigeria’s four refineries have a combined installed capacity of 445,000 bpd but using less than 30% of their installed capacity (Vanguard, January 23, 2012).  For almost the whole of 2010, the four refineries with a combined capacity in excess of 445,000 barrels per day could only refine a mere 80,757 metric tonnes of petroleum products. These are 19,967 of premium motor spirit, PMS or petrol; 53,223.4 MT of automotive gas oil, AGO or diesel; and 7,567MT of liquefied petroleum gas, LPG or cooking gas.

The rest volume of 8.1 million MT of petroleum products that came into the downstream sector was imported. But for the Federal Government/ Nigeria LNG LPD Domestic Supply Programme, only LPG was not imported (Vanguard, January 26, 2011).  With this low domestic refining capacity, Nigeria has no choice but to depend on importation of refined products to meet domestic energy requirements.

What this means is that Nigeria exports raw crude only to import refined petroleum products. To import these refined products, Nigeria would have to pay at the international price per metric ton plus other costs of landing the products in Nigeria. This explains the concept of importation pricing policy. More succinctly, we can explain the concept of importation pricing policy of petroleum products as the situation where Nigeria imports refined petroleum products (in millions of metric tonnes) at the prevailing international price plus other costs of landing the products in Nigeria as indicated in the PPPRA pricing template. This importation is usually undertaken by both the Nigerian National Petroleum Corporation (NNPC) and independent marketers. Not only do we import refined products, the process of importation is fraught with irregularities with high level of corruption including the inflation of figures of imported products (in order to make high subsidy claims) at huge costs to both the government and the Nigerian citizenry. It is worthy to note that the crude refined in Nigeria is supplied to end users at the same price with the imported products.

To understand how petroleum products are priced in Nigeria, we need to take a cursory look at the pricing template of petroleum products in Nigeria.

THE PETROLEUM PRODUCT PRICING TEMPLATE IN NIGERIA AS PROVIDED BY THE PPPRA

The PPPRA products pricing template (Daily & Monthly) is a pricing information sheet detailing the components used in deriving the PPPRA daily/monthly guiding products prices. It employs Import Parity Principle and this includes:

(i) Landing Cost of Products

(ii) Margins for the Marketers, Dealers, and Transporters

(iii) Jetty-Depot Through-put

(iv) Other charges and Taxes.

The objectives of the pricing template are to ensure transparency, full cost recovery, Fairness and efficiency in the importation process but how far this template has fulfilled these objectives could be called to question because of the secrecy, conservatism and non-disclosure in the practical sense.

DESCRIPTION OF COMPONENTS ON THE PRICING TEMPLATE.

 According to the PPPRA, with effect from February 2009, the components of the petroleum product pricing template include:

1.         PRODUCT COST ($/MT)

This is the monthly moving average cost of products cost as quoted on Platts Oil gram. The reference spot market is North West Europe (NWE).

2.         FREIGHT ($/MT)

This is the average clean tanker freight rate (World Scale (WS) 100) as quoted on Platts. It is the Cost of transporting 30, 000mt (30kt) of product from NWE to West Africa (WAF). Trader’s margin of $10/MT is also factored into the Freight cost.

3.         LIGHTERING EXPENSES ($/MT)

STS/Local Freight charge is the cost incurred on the trans-shipment of imported petroleum products from the mother vessel into daughter vessel to allow for the onward movement of the vessel into the Jetty. This charge includes receipt losses of 0.3% in the process of products movement from the high sea to the Jetty and then to the depot. The mother vessels expenses are based on the allowable 10 days demurrage exposure at the rate of $28,000 per day.

The Lightering Expenses also includes the Shuttle vessel’s chartering rates from Offshore Lagos to Lagos and Port Harcourt which currently stands at N2.00 per litre and N2.50 per litre respectively. Trans-shipment (STS) process is as a result of peculiar draught situation and inadequate berthing facilities at the Ports.

4.         NIGERIA PORT AUTHORITY (NPA) CHARGE ($/MT)

It is the cargo dues (harbour handling charge) charged by the NPA for use of Port facilities. The charge includes VAT and Agency expenses.

Currently, NPA charge attracts $10.50/MT on the pricing template.

5.         FINANCING

It refers to stock finance (cost of fund) for the imported product. It includes the cargo financing based on the International London Inter- bank Offered Rates (LIBOR) rates+5% premium for 30 days (for Annual Libor rate of 2.07%, LIBOR cost would be 7.07%). Also included in the Finance cost is the interest charge on the subsidy element being awaited for an allowable 60 days period at Nigerian Inter Bank Offered Rate (NIBOR) rate of 22%.

6.         JETTY DEPOT THRU PUT

This is the tariff paid for use of facilities at the Jetty by the marketers to move products to the storage depots. The value is currently N0.80/litre.

7.         STORAGE CHARGE

Storage Margin is for depot operations covering storage charges and other services rendered by the depot owners. The charge is currentlyN3.00/litre.

8.         LANDING COST

It is the cost of imported products delivered into the Jetty depots. It is made up of components highlighted above (1, 2, 3, 4, 5, 6 and 7).

9.         DISTRIBUTION MARGINS

These include Retailers (N4.60 per litre), Transporters margins (N2.99 per litre), Dealers margin (N1.75 per litre), Bridging Fund (plus Marine Transport Average) (N6.00 per litre) and Administrative charge (N0.15 per litre). This amounts to N15.49 per litre on the template. The overhead cost and other running costs have been considered in the determination of these margins.

10.       TAXES

These include highway maintenance, government, import and fuel taxes. It has the overall objectives of revenue generation, social infrastructure investment and servicing and efficient fuel usage. Presently, all these attract zero taxes.

11.       RETAIL PRICE

This is the expected pump price of petroleum product at retail outlet. It is made up of landing cost of imported product plus reasonable distribution margins.

THE PRICING TEMPLATE: USING PREMIUM MOTOR SPIRIT (PMS) AS A CASE STUDY.

Given the high usage of Premium Motor Spirit (PMS) commonly known as Petrol in Nigeria, we use it to provide a clue on how petroleum products are priced in Nigeria. Following the description provided above, the pricing template of PMS as provided by the PPPRA is as follows:

PPPRA PRODUCT PRICING TEMPLATE PMS        Based on Average Platts' Prices for the month of DECEMBER, 2012 Average Exchange Rate of the NGN =N= to US$ for the Month of DECEMBER, 2012 PMS $/MT Naira/Litre Cost Element; 1 C + F     1,009.92    119.66 2 Trader's Margin          10.00        1.18 3 Lightering Expenses (SVH)          33.46        3.96 4 NPA             5.25        0.62 5 Financing (SVH)          15.85        1.88 6 Jetty Depot Thru' Put Charge              6.75        0.80 7 Storage Charge          25.32        3.00 8 Landing Cost    1,106.55   131.10 Distribution Margins: 9 Retailers          38.83        4.60 10 Transporters          25.24        2.99 11 Dealers          14.77        1.75 12 Bridging Fund           49.38         5.85 13 Marine Transport Average (MTA)             1.27         0.15 14 Admin Charge             1.27        0.15  Subtotal Margins      130.74     15.49 Foot Note: 15 Total Cost     1,237.29    146.59 16 * Official  Ex-Depot        687.96      81.51 **  Under/Over Recovery  -      418.59    (49.59)  Taxes  17 Highway Maintenance              -   18 Government Tax              -   19 Import Tax              -   20 Fuel Tax              -   Subtotal Taxes              -   21 Retail Price        818.70      97.00 Expected Open Market Price (OMP) (Naira/litre) is Landing cost +Margins      146.59 * C+F price is Offshore Nigeria Conversion Rate (MT to Litres): 1341 Exchange Rate (N to $): 159.76 *  Official Ex Depot is exclusive of Bridging Fund, Marine Transport Average (MTA) & Admin. Charge  * *Ex Depot includes Bridging Fund, Marine Transport Average (MTA) & Admin. Charge  *** Effective Date of New Approved Pricing Template is 1st July 2011 Data is as at 31/12/12 The figures below show the importation of crude oil for the 31 days of the month of December 2012.   PPPRA Daily Products Pricing Template – PMS DECEMBER, 2012 Days C + F Trader's  Lightering NPA Exchange Jetty-Dep Depot  Sub-Total Financing Landing Cost Other Charges Dist. Margin  Expected  (Off. NGN) Margin Expenses Rate Thru'Put Charge OMP $/Mt ($/Mt) Charge (MV) (SVL) (SVH) (MV) (SVL) (SVH) (MV) (SVL) (SVH) ($/Mt.) ($/Mt.) (Naira/$) Naira/Litre Naira/Litre Naira/Litre Naira/Litre Naira/Litre Naira/Litre Naira/Litre Naira/Litre Mother Vessel Shuttle Vessel (SV) (MV) Low High 1 2 3 1016.08 10.00 7.72 29.26 33.48 5.25 158.88 0.80 3.00 126.90 129.45 129.95 1.80 1.89 1.90 128.71 131.34 131.86 6.15 9.34 147.35 4 1005.08 10.00 7.69 29.23 33.45 5.25 158.88 0.80 3.00 125.59 128.15 128.65 1.76 1.84 1.86 127.36 129.99 130.51 6.15 9.34 146.00 5 991.08 10.00 7.64 29.18 33.40 5.25 158.88 0.80 3.00 123.93 126.48 126.98 1.71 1.79 1.81 125.64 128.27 128.79 6.15 9.34 144.28 6 979.08 10.00 7.61 29.15 33.37 5.25 158.88 0.80 3.00 122.50 125.06 125.56 1.66 1.75 1.76 124.17 126.80 127.32 6.15 9.34 142.81 7 968.08 10.00 7.57 29.12 33.34 5.25 158.88 0.80 3.00 121.20 123.75 124.25 1.62 1.70 1.72 122.82 125.45 125.97 6.15 9.34 141.46 8 9 10 984.08 10.00 7.62 29.16 33.38 5.25 158.88 0.80 3.00 123.10 125.65 126.15 1.68 1.76 1.78 124.78 127.41 127.93 6.15 9.34 143.42 11 981.14 10.00 7.61 29.15 33.37 5.25 158.88 0.80 3.00 122.75 125.30 125.80 1.67 1.75 1.77 124.42 127.05 127.57 6.15 9.34 143.06 12 996.08 10.00 7.66 29.20 33.42 5.25 158.89 0.80 3.00 124.53 127.08 127.58 1.73 1.81 1.83 126.26 128.89 129.41 6.15 9.34 144.90 13 1008.97 10.00 7.70 29.24 33.46 5.25 158.89 0.80 3.00 126.06 128.62 129.12 1.78 1.86 1.87 127.84 130.47 130.99 6.15 9.34 146.48 14 1011.97 10.00 7.71 29.25 33.47 5.25 158.89 0.80 3.00 126.42 128.97 129.47 1.79 1.87 1.88 128.21 130.84 131.36 6.15 9.34 146.85 15 16 17 1022.47 10.00 7.74 29.28 33.50 5.25 158.89 0.80 3.00 127.67 130.22 130.72 1.83 1.91 1.92 129.50 132.13 132.65 6.15 9.34 148.14 18 1022.02 10.00 7.74 29.28 33.50 5.25 158.89 0.80 3.00 127.62 130.17 130.67 1.83 1.91 1.92 129.44 132.07 132.59 6.15 9.34 148.08 19 1027.08 10.00 7.75 29.29 33.51 5.25 158.89 0.80 3.00 128.22 130.77 131.27 1.84 1.93 1.94 130.06 132.69 133.21 6.15 9.34 148.70 20 1033.08 10.00 7.77 29.31 33.53 5.25 158.89 0.80 3.00 128.93 131.48 131.98 1.87 1.95 1.96 130.80 133.43 133.95 6.15 9.34 149.44 21 1021.08 10.00 7.73 29.27 33.49 5.25 158.89 0.80 3.00 127.50 130.06 130.56 1.82 1.90 1.92 129.33 131.96 132.47 6.15 9.34 147.96 22 23 24 1017.14 10.00 7.72 29.26 33.48 5.25 158.89 0.80 3.00 127.03 129.59 130.09 1.81 1.89 1.90 128.84 131.48 131.99 6.15 9.34 147.48 25 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 26 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 27 1043.64 10.00 7.80 29.34 33.56 5.25 158.89 0.80 3.00 130.18 132.74 133.24 1.91 1.99 2.01 132.09 134.73 135.24 6.15 9.34 150.73 28 1034.19 10.00 7.77 29.31 33.53 5.25 158.89 0.80 3.00 129.06 131.61 132.11 1.87 1.95 1.97 130.93 133.57 134.08 6.15 9.34 149.57 29 30 31 1026.19 10.00 7.75 29.29 33.51 5.25 158.89 0.80 3.00 128.11 130.66 131.16 1.84 1.92 1.94 129.95 132.59 133.10 6.15 9.34 148.59 AVG 1009.92 10.00 7.70 29.24 33.46 5.25 158.88 0.80 3.00 126.17 128.73 129.23 1.78 1.86 1.88 127.95 130.59 131.10 6.15 9.34 146.59 Note: Off. NGN: Offshore Nigeria

Source: PPPRA

A HISTORY OF PETROLEUM PRODUCT PRICING AND FUEL SUBSIDY ADMINISTRATION IN NIGERIA

Over the years, the Nigerian government has intervened in the pricing of petroleum products. The Nigerian government unilaterally determines the pricing of petroleum products through the administration of a subsidy regime under the Petroleum Support Fund (PSF). Of all the essential products, only the Automotive Gas Oil (AGO) commonly known as gas is not being subsidized as it has undergone complete deregulation. The government periodically reviews the subsidy regime (and by implication the price of petroleum products) as determined by government’s fiscal position. Although, the government views the subsidy regime as a huge fiscal burden but attempts to completely remove the subsidy is usually met with very stiff resistance by labour unions and the general public (who see the subsidy as the only thing the masses benefit directly from government) through strikes and mass protests. So, the approach of government has been to increase the prices of these products marginally and then negotiate with labour unions. In January, 2012, President Goodluck Jonathan announced a full ‘deregulation’ of the downstream sector but still pegged the price of PMS at N142 per litre. With the new price tag of N142, many Economists including Professor Milton Iyoha have argued against government’s use of the term ‘deregulation’ as anti-economics since government still fixed the price of the products. He argued that the better term to describe the scenario was a fuel price increase (The Economist magazine, November 2012). Today, as reflected in the PPPRA template above, the official price of PMS is fixed at N97 (although the price varies across the country despite the existence of a Petroleum Equalization Fund (PEF) due to the high level of inefficiency and profiteering in the downstream sector) as against a total cost of N146.59 per litre (landing cost of N131.10 and distribution margins of N15.49) effectively giving a subsidy figure of N49.59 paid by government per litre imported.

Although, the purpose of the subsidy is to reduce the retail price of petroleum products for end users (and thus increase welfare gains) but this is argued against based on the premises that government’s activities in the downstream sub-sector have been largely distortionary. Below is a chronological presentation of petroleum product prices in Nigeria as administered by different political administrations since the 1970s:

Gowon, 1973: 6k to 8.45k (40.8%)

Murtala, 1976: 8.45k to 9k (0.59%)

Obasanjo, October 1, 1978: 9k to 15.3k (70%)

Shagari, April 20, 1982: 15.3k to 20k (30.71%)

Babangida, March 31 1986: 20k to 39.5k (97.5%)

Babangida, April 10 1988: 39.5k to 42k (6.33%)

Babangida, January 1, 1989: 42k to 60k Private vehicles.

Babangida, December 19, 1989: moved to uniform price of 60k (42.86%)

Babangida, March 6, 1991: 60k to 70k (16.67%)

Shonekan, November 8, 1993: 70k to N5 (614%)

Abacha, November 22,1993: petrol price drops from N5 to N3.25k (-35%)

Abacha, October 2,1994: N3.25k to N15 (361.54%)

Abacha, October 4,1994: price drops from N15 to N11(-26.67%)

Abubakar, December, 20, 1998: N11 to N25 (127.27%)

Abubakar, January 6,1999: N25 to N20 (-20%)

Obasanjo, June 1, 2000: N20 to N30 (50%)

Obasanjo, June 8, 2000: Petrol price reduced to N22 (-10%)

Obasanjo, January 1, 2002: N22 to N26 (18.18%)

Obasanjo, June to October, 2003: N26 to N42 (23.08%)

Obasanjo, May 29, 2004: N50 (19.05%)

Obasanjo, August 25, 2004: N65 (30%)

Obasanjo, May 27, 2007: N75 (15.38%)

Yar’Adua, June 2007: N65 (-15.38%)

Jonathan, January 1, 2012: N141 (117%).

January 28, 2012: N97 (-31.20%).

Source: Eme Okechukwu and Onwuka Chukwujekwu (2011)

6.0 WHY NIGERIA PURSUES A POLICY OF IMPORTATION PRICING OF HER PETROLEUM PRODUCTS.

From our analysis so far, it is very obvious that Nigeria pursues a policy of importation pricing of petroleum products essentially because she imports bulk of her products from abroad due to the fact that domestic refining capacity cannot meet up with domestic demand.

There seems to be an age-long conspiracy to ground the refineries or keep them at sub-optimal capacity so that the lucrative business of petroleum product importation will continue to boom. This is a grand conspiracy by past and present political leaders and their stooges in oil agencies (including the NNPC) and rapacious oil magnates to keep feeding fat on oil subsidy at the expense of the development of the downstream sub-sector and the Nigerian project as a whole.

The high level of general inefficiency (and specifically, inefficiency in the management of refineries) and corruption in the sector is mind-boggling. The Petroleum industry is one that is run like an elite secret society leaving the operations of the industry to be shrouded in secrecy ( largely because activities of the Nigerian Extractive Industry Transparency Initiative (NEITI) is inhibited) with lots of non-disclosure and false disclosure. This fact was recognized in a town hall meeting during the heated days of the fuel subsidy crisis by the President of the Trade Union Congress (TUC), Comrade Peter Esele when he described the operations of the NNPC and its subsidiaries as “the more you look, the less you see.”

The argument therefore is that as long as Nigeria’s domestic refining capacity cannot meet up with local demand, Nigeria would always resort to importation pricing of petroleum products. This is not an option for any inward and forward-looking country but that is the situation with Nigeria.   

THE IMPLICATION OF THE IMPORTATION PRICING POLICY: A THEORY OF WELFARE LOSS.

Nigeria’s policy of importation-pricing has wide-ranging national implications. Here, I attempt to capture these implications in a theory of welfare loss. The welfare loss includes losses being incurred by the masses, the private sector, the government and the general economy. These losses are captured below:

`

               i.            By buying petroleum products at imported prices, the Nigerian citizenry incurs a loss in standard of living despite the existence of a subsidy regime. This is because even with the subsidy, Nigerians are still buying petroleum products at a higher price than it would have been if the products are refined internally. When compared with other members of the Organization of Petroleum Exporting Countries (OPEC), we find that Nigeria has the second highest price of PMS per litre at N97 after Iran (N102.05). Yet Iran pays a national minimum wage of N86, 585 while about 18 states of the federation have not complied with the national minimum wage act provision of N18,000.

OPEC Member	PMS Price/Litre	Minimum Wage	Population	Production '000 bPD (2007)
Venezuela	3.61 Nigerian naira	95,639 Nigerian naira	29,105,632	2,340
Kuwait	34.54 Nigerian naira	161,461 Nigerian naira	3,566,437	2,340
Saudi Arabia	25.12 Nigerian naira	99,237 Nigerian naira	27,136,977	9,800
Iran	102.05 Nigerian naira	86,585 Nigerian naira	75,330,000	3,700
Qatar	34.54 Nigerian naira	101,250 Nigerian naira	1,696,563	810
UAE	78.18 Nigerian naira		8,264,070	2,500
Algeria	63.55 Nigerian naira	55,957 Nigerian naira	36,423,000	1,360a
Libya	26.69 Nigerian naira	23,813 Nigerian naira	5,670,688	1,650
Iraq	59.66 Nigerian naira	25,813 Nigerian naira	30,399,572	1,481
Nigeria	140–200 Nigerian naira	18,000 Nigerian naira	167 million	2,250

Source: Wikipedia
As of 28 January 2012, the exchange rate was 1 United States dollar = 160.9561 Nigerian naira

The table above when analyzed lead us to conclude that Nigeria has the lowest standard of living among all OPEC countries as far as petroleum product pricing is concerned.       

            ii. As long as importation and thus importation pricing of petroleum products continue, the country is indirectly exporting jobs and importing unemployment and poverty. The more worrisome is the fact that the products are even imported from non-oil producing countries like Amsterdam, India, Korea, Finland, Singapore, France, Israel, Portugal, Italy, Sweden, Tunisia and many more. Worst still, majority of the products are ex-vessels rather than ex-depots (Vanguard, January 26, 2011). If all of Nigeria’s oil is refined in Nigeria, lots of jobs would have been created in the value chain of the downstream sector and this would alleviated the high level of unemployment and poverty in Nigeria. This is a welfare loss to the Nigerian masses.

         iii. The continuous importation of petroleum products also orchestrates a loss for the private sector. The private sector is losing possible profits it could have recouped by investing in building private refineries. The continuous importation pricing and particularly the regulation of the downstream petroleum sub-sector by government is a dis-incentive for private sector investment in domestic refining. This is a loss to the private sector.

         iv.  The government is also at the losing end as far as the subsidy regime (which is a result of the importation pricing policy of petroleum products) is concerned. The government views the subsidy regime as a fiscal burden and (only as a necessary evil) as huge funds that are supposed to be pumped into development efforts are diverted into a corruption-ridden subsidy regime. Nigeria spends so much on the subsidy regime despite her infrastructural deficit. The sadness of the imports as well as the subsidies that go with them, made a former Minister of National Planning and former PPPRA Board Chairman, Chief Rasheed Gbadamosi, to declare, “Trillions of naira which should have been used to develop other sectors by providing basic infrastructure such as water, roads, schools, hospitals are being wasted, because the downstream allowed monumental laziness.” (Vanguard, January 6, 2011).

Figures from a factsheet presented by the Finance Minister, Dr. Ngozi Okonjo-Iweala (during a parley between government officials and opposition political parties) show that between 2006 and 2011, the country spent N3, 655.17 trillion to subsidise fuel. According to the Minister, the cash is 30 per cent of the total expenditure, 118% of the capital expenditure and 4.18% of the GDP.’ The Minister observed that in 2011 alone, about ‘N1.348 trillion was spent between January and October and it is expected to reach N1.436 trillion by the end of the year.’ Obviously, it is seen that the subsidy on imported petroleum products is a huge constraint on government finance expenditure since much of the funds that should go into infrastructural financing is swallowed up by the callous subsidy.

When Nigeria cannot play the role of a developmental state because of diversion of much-needed funds to a callous subsidy, then it could be argued that both the government and the society are incurring losses.

            v.            As importation and thus, importation pricing of petroleum products continue, the whole society is incurring a loss. With a distortionary subsidy regime, there is no incentive for private sector investment in the downstream sector (particularly in refining). The dearth of such investment denies Nigeria the possible value addition to the larger economy that a buoyant downstream sub-sector could have triggered. This is therefore a loss to the whole Nigerian society.

WAY FORWARD – ALTERNATIVE POLICY ACTIONS TO AVOID THE IMPORTATION PRICING POLICY PETROLEUM PRODUCTS IN NIGERIA.

Given the detrimental implications of the importation pricing policy of petroleum products especially with regards to the huge national welfare losses being incurred, it becomes necessary for Nigeria to seek alternative policy actions to avoid the importation pricing policy of petroleum products. The following alternative policy actions are recommended:

EFFECTING THE TURN AROUND MAINTENANCE (TAM) OF EXISTING REFINERIES

Nigeria’s four refineries have an installed capacity of 445,000 bpd but are currently operating far below capacity. There is need for Nigeria’s existing refineries to be repositioned to function at optimal capacity.

In this regard, Government should ensure that the overall Turn Around Maintenance (TAM) of our refineries as announced by the Minister of Petroleum Resources is properly supervised to allow the refineries function at optimal capacity and augment domestic supply. It is to be noted that the Federal government had announced that it had signed a contractual agreement with the original designers and builders of the existing refineries to effect a turn-around maintenance that will allow the refineries function at 90% capacity. It is important for the government to make true its words in this regard. This will serve at least as a short-run solution to reduce the quantity of imported petroleum products and reduce the imbroglio of importation pricing policy of petroleum products in Nigeria.

BUILDING NEW REFINERIES

It is unfortunate that all of Nigeria’s four refineries were built by the military. It is important for the government to invest in building new refineries especially the so-called green-field refineries.

Many analysts have argued that the way out of the current downstream quagmire is not only to get the four refineries to be truly operational, rather than mere political pronouncements as well as invest more in Greenfield refineries (Vanguard, January 26,2011).

In a lecture delivered during the heated days of the fuel subsidy protests, the Managing Director/Chief Executive Mobil Oil Nigeria Plc, Mr Yemi Oyebanji  argued that what import money can buy based on current value, the $7.6bn used to import petroleum products between January and November 2010, can comfortably build at least 10 green-field refineries  (Vanguard, January 26,2011).

However, there is a caveat here and that is the fact that from the Nigeria’s experience, government and her agencies are bad managers. Therefore, these new refineries should be handed over to the private sector to manage to ensure that they function efficiently. The erection of new refineries would raise local refining capacity and Nigeria would be able to avoid the importation pricing of petroleum products in Nigeria

FULL DEREGULATION OF THE DOWNSTREAM SUB-SECTOR

The dearth of private sector investment in the downstream sub-sector of the petroleum industry has been attributed to government’s regulation of the downstream sub-sector and the administration of a distortionary subsidy regime.

The existence of the oil subsidy has obviously stifled the much-needed private sector investments in the downstream sector of the oil industry. This goes with the attendant loss of potential jobs because of the dearth of investments in the sector. This is particularly disturbing especially in an economy with a very high unemployment rate as ours. Yet, we do know how much unemployment has contributed to the current wave of insecurity across the country. The oil subsidy as currently administered is neither helpful in capacity development nor building industry. Rather, by subsidising imported oil products, Nigeria only creates jobs for the exporting countries. If the subsidy is removed, it will enhance market competition and create the environment for private domestic refining to sustain domestic demand. As much as rudimentary economics tells us, no rational investor will put his investments where Government arbitrarily administers a regulatory price.

The Managing Director/Chief Executive Mobil Oil Nigeria Plc, Mr Yemi Oyebanji, argued at a recent conference in Lagos, “As long as it is easier for people to secure import licenses even when it is difficult to judge their capacities, and as long as we cannot have competitive pricing and better standard for all, the downstream will remain at the development stage (Vanguard, January 26, 2011).

 From the foregoing, it is obvious that the oil subsidy regime has a very gigantic opportunity cost in terms of loss of employment generation, investments and value addition to industry.

The Deregulation policy has globally been embraced by several countries, in order to lessen public sector dominance and for developing a liberalized market while ensuring adequate supply of products. Such is the story in Peru, Argentina, Pakistan, Chilean, Philippines, Thailand, Mexico, Canada, Venezuela, Japan and USA, all of which have systematically dismantled their State-owned oil companies, for a significant turning point in the success story of their oil industry reform efforts. (Loretta, 2004)

SANITIZING THE PETROLEUM SECTOR

  Before embarking on building new refineries and full deregulation, there is need for the petroleum industry particularly the downstream sector to be sanitized. This is because of the high level of corruption and secrecy in the sector.

In this regard, government should adequately implement the reports of the various committees set up by government including the Mallam Nuhu Ribadu-led Petroleum Revenue Special Task Force; the Mr. Dotun Suleiman-led Taskforce on Governance and Control; and the Dr. Kalu Idika Kalu-led National Refineries Special Taskforce.

In the same vein, government should legally and administratively empower the Nigerian Extractive Industries Transparency Initiative (NEITI) to go beyond preparing reports and recommendations to implementing them to ensure sanity of the petroleum industry.

OVERHAULING THE NIGERIAN NATIONAL PETROLEUM CORPORATION (NNPC).

 If the NNPC must still exist after full deregulation, then the Corporation must be ready to play in a competitive industry with no special attention from the government. NNPC must be overhauled to operate in a level-playing ground with other industry operators and not a situation where government’s bias for the corporation has fuelled inefficiency and poor performance making it to be ranked as one of the 10 most failed corporations in the World.

In this regard, the NNPC has a lot to learn from the success stories of the national oil corporations of other developing countries including the Aramco (Saudi Arabia), Petrobras (Brazil) and Petronas (Malaysia) of this World.  

 CONCLUSION

At this stage of our national life, Nigeria should not have any business with the importation pricing of petroleum products but this has become inevitable due to the high level of inefficiency that characterized activities of the petroleum sector (particularly the downstream sub-sector). The huge national welfare loss being incurred is particularly devastating. The way forward for Nigeria is for government to provide the enabling environment for the private sector to build new refineries, ensure full deregulation, sanitize the petroleum sector, overhaul the NNPC and make efforts to diversify the country’s economic base. It is hoped that when these measures are put in place, Nigeria would be able to avoid the importation pricing of her petroleum products and reposition the Nigeria’s petroleum sector for maximum productivity and efficiency. Government must be sincere in efforts to avoid the importation pricing of petroleum products which has become the shame of our nation and a huge national tragedy.

  REFERENCES

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Ayoola, K.A. & Salami, O (2010). The 'War' of Appropriate Pricing of Petroleum Products: The Discourse of Nigeria's Reform Agenda.  http://www.linguistik-online.de/42_10/salamiAyoola.html

Loretta O.(2004). Deregulation Of The Nigerian Downstream Oil Sector Keeping Faith With A Global Trend ww.pppra-nigeria.org/articledetails.asp. Also at www.vanguardngr.com/.../why-oil-sector

deregulation-is-imp... - Cached 21 Dec 2011

National Bureau of Statistics (2010). Petroleum Statistics .

Ojameruaye, Emmanuel (2011): “The Political Economy of the Removal of Petroleum Products Subsidy in Nigeria: Part 1- The Politics.” Available at http://www.chatafrik.com/articles/economy/itemlist/user/149-emmanuelojameruayephd.html

Oriakhi, D.E (2003). “OPEC and the Development of the Nigerian Petroleum Industry.” In Nigerian Economy: Structure, Growth and Development. Mindex Publishers, Benin-City.

Orubu, C. O (2003). “The Development and Contribution of the Petroleum Industry to the Nigerian Economy.” In Nigerian Economy: Structure, Growth and Development. Mindex Publishers, Benin-City.

PPPRA. 2013. Petroleum Products Pricing Template. Available at http://www.pppra-nigeria.org/index.asp

PPPRA. 2013. Petroleum Products Pricing Template: PMS.

Social Development Integrated Centre (2012). Fuels of Dissent: Politics, Corruption and Protest over Fuel Subsidy in Nigeria. Published by Social action @ www.saction.org.

The Economist Magazine (November 2012). 4^th edition, volume 4. A Publication of the Nigerian Economics Students Association (NESA), Uniben Chapter.

The Energy Information Agency (EIA,), United States: Nigeria .Last updated on October 16, 2012. Available at http://www.eia.gov/countries/analysisbriefs/Nigeria/nigeria.pdf

Vanguard. 2011. “Petroleum Imports: Shame of a Nation.” January 6, 2011.

Uzoigwe, Chimezie Daniel is an Author and Social Commentator. A final year Student at the University of Benin. E-mail: uzoigwechimezie92@yahoo.com. 08179741950

      

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