Economic Confidential, November, 2009

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Deregulating Robbery in Nigeria

By Kola Ibrahim

Against all opposition, the Yar’Adua government has again come out boldly to announce total deregulation of fuel come November 1, this year. This crude and rude behaviour of government against the hues and cries of the toiling people is highly condemnable. The labour movement must immediately commence mass mobilization through a One-Day national warning strike, with mass mobilization through rallies, pickets of government places including national assemblies and state government houses, leafleting, etc before this month runs out to prepare for an all-out mass movement against this obnoxious policy. Local, community and state mobilization committees must be immediately set-up to include workers, students, youth, market women, peasants, artisans and community groups.

The labour movement must not wait until the terrible policy start taking its tolls on the poor masses of this country; when government will be using the argument of ‘negotiation’ to water down the opposition before taking action. Even if Yar’Adua government is forced to concede for now, it will rebuild its arsenal to launch this and other anti-poor policies. Thus, the labour movement and pro-labour groups must demand open democratic probe into the over 3 trillion-naira oil subsidies and public declaration of financial assets and business of all oil companies in the country and nationalization of the commanding oil industry under the democratic control and management of the working people and consumer association. This is the real alternative to the fraudulent deregulation policy of the government.

With the government’s announcement, a civil war has already been declared on the working masses by the government, the labour movement should not wait any longer. It should be recalled that already prices of kerosene, diesel and industrial fuel have already been deregulated without any formal announcement. Therefore, to wait for an official announcement of government before responding to this declaration of open war by the government, is giving government time to re-strategize attack and mobilize all its forces of reaction against working people. The labour movement should not take the masses to the barricade with a white flag.

Indeed, the implementation of this policy is a leeway to the expansion of all the anti-poor, neo-liberal policies, being introduced for over two decades which have made the rich corrupt few richer while making life more miserable for the working but poor people. However, the leadership of the labour movement must not only re-strategize its opposition to this policy, it must take a revolutionary, working class. It must be totally and unflinchingly opposed to not only deregulation but all anti-poor, neo-liberal capitalist policies if it must to secure a better living for the working people.

To the Yar’Adua government, the Governors’ Forum, the big business and the capitalist pundits in the media and boardrooms, deregulation is necessary because the subsidy on fuel pricing has led to huge corruption and looting of the treasury by “unknown” leeches within the ruling class, which the government claim is holding it to ransom. How many of these public looters have been probed or prosecuted the Yar’Adua government and its town-criers have failed to tell the people? What an irony: an “anti-corruption” government accepting the superiority of gangsters! Maybe they are the real sponsors of the variously rigged elections in Nigeria that put current political officers in power, thus they are sacred cows.

The argument of Yar’Adua government to justify deregulation is a continuation of the old worn-out excuses of the ruling class. The excuse of the Obasanjo government for incessant increase in fuel prices was that it was spending tens of billions on fuel subsidy; therefore the poor people must bear the brunt through fuel price hike. Yar’Adua government has only stepped this up by exposing that the subsidies running to over 3 trillion Nigerian naira have only gone to the sharks in big oil marketing business and government. But, what are government’s alternatives to this obviously maddening scenario painted by the government itself: arrest the looters? Stop the financial hemorrhaging of the nation? Obviously not – but making the people the direct victims of the looting: more deregulation.

According to the Nigerian economist, Prof. Sam Aluko, oil marketers make over $160,000 on a ship-load of refined petrol fuel imported into this country. This is aside profit being made on other crude products like Paraffin and jet fuel. Neither is it part of the profit being made by shipping companies and private port managers, among other sundry charges that will add up to extra 40 percent of fuel cost. With the country’s refineries working at less than a third of its capacity, Nigerian government has already privatized fuel production and deregulated its importation, while only using public resources to subsidize the profit of the oil marketers. Therefore, the latest attempt is only a re-deregulation of this obvious robbery. In this what can be termed “subsidized” deregulation system, the Nigerian government use public resources meant for the development of social infrastructures to service the profit interests of fuel marketers, their bank creditors (some of whom are now being made scapegoats for massive fraud perpetrated by all shades of big business class), shipping companies, private port managers, stock gamblers, etc. In the planned re-deregulation, the poor people are to directly bleed out billions in profit for these fat-cats while government also doles out billions through other means to them.

Private Refinery: Sheer Mirage

Worse still, whenever there is crisis for oil importers, government will immediately intervene on their behalf (tax break, special offer, price flexibility, cheap credit, etc) in the name of ‘encouraging investment’ – the same way that it arbitrarily fixed the price of petrol at 65 naira, even when it should be less than 50 naira. Therefore, the planned re-deregulation is a cover to insure super-profit. Some have argued that deregulation will ‘encourage’ private investors to invest in oil refining. But, funny enough, while tens of persons were given licenses by Obasanjo government to build private refineries, these shylocks have converted these into license to import refined fuel, no thanks to the connivance of the Obasanjo government. According to reports, it will cost around $2 billion to build a standard refinery. How many local investors can commit this amount to a long term project like refining?

The main reason why these oil companies (local and foreign) will not build refinery is because they depend on short term profits and not long-term investment that will tie down their capital. This explains why the world’s financial sector overtook the industrial sector (in US, manufacturing share of GDP fell from 25% to 12% while financial share increased from 12% to 20.5% from 1973-2008), which led to the current global economic crisis that has foreclosed any tangible investment in the third world – except financial gambling. Nigeria ’s case is worsened by the terrible state of the nation’s infrastructures which has made investment in the country costly. Nigerian capitalists are parasitic, who only mushroom on the decayed carcass of mismanaged national economy. They are the beneficiary of government’s hand out of public resources to private hands – privatization of public corporations/oil wells, commercialization of social services, official corruption cum nepotism, etc. This is why they will prefer to buy the nation’s refineries, cement companies, telecomm companies, oil wells, etc at token where they can easily sell their estates to make quick profits, than investing directly.

However, assuming without conceding that private individuals invest in oil refining, as is being hoped by some pundits, can this alleviate the suffering of Nigerians? In the first instance, the refining will be hijacked by a clique as most of these moneybags can hardly bear the risk alone thus leading to formation of cartel and monopoly – the example of NNPC privatization in 2007 where a cartel of big companies, banks and foreign firms bid to buy less than a third of NNPC at fraction of its value is instructive. Thus, the question of competition and consequent price reduction is out of it as demand and supply will be manipulated for price increase. A vital example is the deregulation of paraffin (kerosene), diesel, cooking gas and jet fuel, which prices have skyrocketed daily.

Moreover, these companies will have to provide their own power, transport system, etc, as the nation’s infrastructures are dilapidated, which will bear on the cost and availability of the products while prices will have to be hiked meet international profit level. Meanwhile, there is no way government can get provide these infrastructures without impinging on the super-profit of the business and political class. More important is the profit flight by multinational companies which will escalate devaluation and balance of payment. All this will worsen the already comatose industrial sector with attendant job losses and associated social crises.

Labour’s limited opposition to deregulation

In a statement by the NLC, the central labour union, it tasked government to in the immediate, refine petroleum products from neighbouring countries (so as to reduce landing cost) and then start the process of building new refineries. This may sound pragmatic, but it is clearly unrealistic. This NLC’s position fails to take into cognizance, the political economy of Nigerian ruling class. It assumed that the government is acting independent of big business. The question we must ask is: Is it not the same private companies, and Nigerian looters who have majority shares in oil refineries in these neighbouring countries that will refine, import and distribute the fuel? Will government not continue to subsidize their profits?

The demand for building more refineries is correct but limited. The labour movement must be aware that many of the Nigerian politicians at all levels are directly linked up with the business class. The labour movement must ask itself why Nigerian governments for the past ten years of civil rule have not added a tangible value to the nation’s refineries (despite over $300 billion that had accrued to the country’s coffer) but have actually used it as a conduit pipe to drain billions of dollars to private accounts of corrupt government officials, bank-sters, big business, contractors and foreign corporations. Yet more working people are being thrown into the dungeon of poverty, want and misery. That Yar’Adua government could not build more refineries or undertake an ambitious sustainable and environmental friendly energy project more than two years in office is not accidental. It is a product of the neo-colonial, neo-liberal capitalist arrangement where the rich few rent-seekers are in control of the economy on behalf of the international imperialist capital. If at all Nigerian government commit itself to building new refineries it will result from either government’s intervention to restore oil oligarchs’ falling profitability or a product of intense mass political struggle which tend to overturn the system.

The labour unions like PENGASSAN (oil workers’ union) and TUC even stated that they are opposed to privatization unless ‘it is necessary and transparent’. The question is: what transparency is needed for a policy that is in itself robbery of the whole country by a tiny clique? The same unions oppose deregulation and privatization because it will lead to worsening living standard of the working people; why then must the same policies be necessary in any form? Comically, the same government that failed to probe into hundreds of billions wasted on refurbishing the country’s refineries now wants to sell the refineries to their plunderers, in the name of encouraging private investment.

Democratic Public Ownership

Without working class movement, through organized mass political movements, opposing not only deregulation but also demanding public ownership of the oil industry under democratically control and management of elected representative of working people and consumers’ organizations, building new refineries, if at all it is undertaken by government, will become another conduit pipe for massive looting of public treasury, collapse of these refineries (through nepotistic and corrupt managements) and their eventual privatization. Public ownership under democratic management of the working people and consumers will imply that management officials of oil industry will be elected by the workers and consumer associations, and such officials will collect salaries of averagely skilled workers and be subject to immediate democratic recall. This will also mean opening of financial records of oil companies while huge profit going to private coffer of big business sharks will be used to undertake long term plans for sustainable energy development.

With this, it will be possible to have plans of not only building new refineries on sustainable basis but also developing other sustainable energy and power sources. All this can only be possible by developing other sectors of the economy. Meaningfully, this will require the extension of public ownership to the commanding height of the economy. The tens of billions of dollars in the nation’s foreign account will be used to undertake a long term development of all sectors of the economy and energy resources. This will means among others, free, quality, massively funded, expanded and democratically-run education and healthcare system, provision of employment for all able bodied citizens, efficient social infrastructures – cheap, efficient and environment friendly transport system (road, water, rail and air), energy system,  mechanized, poor-peasant-oriented and environment friendly agricultural, potable water and mass public housing.

For a new social order

But all the above programmes cannot be achieved by ‘advising’ Nigerian capitalist ruling class. It needs to be demanded by the labour movement through mass movement built democratically from the grassroots and communities, which will place the working class in power. The rot in the oil industry is also glaring in other sectors of the economy – social services, power generation, financial sector, etc. So, the working class movement must understand that resistance to deregulation policy needs mass actions which must start with re-building mass organizations of the working people, especially the labour movement (as a fighting and democratic organization) that will combine struggle for N52, 200 wage without retrenchment, massive funding of education, healthcare, etc, with the political struggle to take over governance. The labour movement need to call an immediate summit of all working people’s organizations, pro-poor organizations, student/youth movements, peasants/market women organizations, socialist movements, leftwing political parties, self-determination groups, etc to draw up plans of building a mass working people’s political platform that will champion the struggles. Such platform will have to adopt a revolutionary democratic socialist stand against neo-liberal capitalism.

A genuine socialist system will combine nationalized economy with workers’ democracy (as against monstrous bureaucracy of Stalinism that collapsed the nationalized economy of Soviet Union and Eastern Europe in the 1990’s) while taking an internationalist outlook as a nationalized economy cannot operate in isolation. A successful movement of the working people in Nigeria will resonate and serve as beckon to working and oppressed people all over the world.

Kola Ibrahim

kmarx4live@yahoo.com

Obafemi Awolowo Univeristy (OAU), Ile-Ife.