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When is Nigeria going to gain economic freedom?

by Business News Report

The disclosure on Thursday last week that Nigeria is now importing Low Pour Fuel Oil is to say the least alarming. The way the country is going, very soon Nigeria will be importing water that is abundantly available in the country. Nigeria in the recent past used to export LPFO to generate foreign exchange. But today many industries in the country are said to be importing LPFO. LPFO is Low Pour Fuel Oil mainly that is mainly used in Industries as fuel for generation of power or for firing their heaters.
Allocation of the product was made to industries through Marketers when the refineries were fully operational. LPFO at the time was mainly exported but now the country has to import the product. In a country where power supply is erratic and insufficient in supply industries resort to use of gas and LPFO to generate power.
Unfortunately, a country that is blessed by God with abundant crude oil and gas can not find its feet to produce enough gas and LPFO to power industries. Yet Nigeria is aspiring to become a leading economy among the committee of nations. Dangote Cement PLC which raised the alarm over the continued short supply of Gas and LFPO in the country said very clearly that the situation has gone from bad to worse in the last six months. Lamenting the shortage of gas and Low Pour Fuel Oil supply in the country, Mr Devakumar V G Edwin Managing Director Dangote Cement said that if the situation is allowed to continue much longer, it will have adverse effect on industries and the recently privatised power sector. But Nigerian officials who play to the gallery would always want Nigerians to believe that everything is working and that there is hope that things will soon improve.
While Dangote cement officials raised alarm over the non availability of gas, the bakers committee through Jubril Aku wants Nigeria to believe that the banks will come to the nation’s rescue by helping power sector off set the N25 billion that was inherited by the power firms from the PHCN legacy firms that has become a challenge to increasing gas supply for power generation.
The Committee said “Today, there are enough incentives for the gas companies to produce gas and that is necessary because when you look at the 26 generating stations in Nigeria, they are all gas-dependent. So, we feel, that is one major incentive that would help the gas companies to begin to produce locally. “Another incentive has to do with the legacy debt. The legacy PHCN had accumulated of about N25 billion and the gas companies have always been agitating that the debt should be paid otherwise they would not produce to begin to accumulate new debts. The Bankers’ Committee is willing to support an initiative where an SPV would be set up, that would provide loans to clear that debt and over time, the loans would be recovered from the multi-year tariff order (MYTO) and direct deductions. This is a trap that would enslave electricity consumers by the banks in effort to recover their loans. Nigerian banks have do not have long term capital to invest in long term project. Setting up a special purpose vehicle by the banks will be a short term measure that will not resolve the outstanding issue.

The question is where are the result of similar interventions in the past? There was intervention in textile, aviation and SMES? What is the state of these sectors as of today?
Most industries in Nigeria rely on gas supply and LPFO to power their plants as public power supply has become a stand by thing, are now suffering as a result of inadequate gas and LPFO supply causing them to produce for below their installed capacity. If firms in the real sector are not producing enough to meet local needs Nigerians will continue to depend on import for a long time to come. From what is happening in the country now the most unfortunate of it all is the fact that Low Pour Fuel Oil (LPFO) which was supplied to industries from Kaduna and Warri refineries is now being imported by companies. Why is Nigeria going round in circles? Why can’t Nigeria get just one good head as a leader to break this jinx of a thing? Importation of fuel and other things that can be produce locally is appalling and disheartening. Where is theis government gas master plan? When are Nigerians going to begin to see result? Motions without movement of various administrations in this country are becoming sickening.
Nigeria recently privatized the power sector.
The generating companies made huge investment in the various power plants but unknown to many gas supply will become a hindrance to moving forward. Today many are struggling to pay through their noses. The privatization raised Nigerian hopes of regular power supply, but that is now far fetched as hope for gas supply looks very far off.
Many of the power generating companies GENCOs, are already facing difficult times as a good number which borrowed money from banks are finding it difficult to meet their obligations to the banks because they can not generate enough power due to lack of gas supply. Some of the loans taken by these power operators may go bad and the Asset Management Company of Nigeria may be called upon to buy off these non performing loans in banks. But AMCON has already foreclosed further purchase of non performing loans in Nigerian banks.
Failures of these loans to perform portend great danger to the banking industry and the economy as a whole. If the situation is not nib in the bud another round of banking crisis may rear its ugly head with its attendant consequences. Every Nigerian should be concerned at this development as it will hinder the prospects of job creation and further compound the unemployment situation in the country. The unemployment situation in the country is bad as it is for companies to begin to retrench workers and force more Nigerians into the labour market the nation must be prepared for more robbers and militancy by youths from across the country.
Let Nigeria refineries begin to work. The National Assembly should open up the oil sector to private investment by passing the PIB bill, and then Nigeria will be free from the shackles of the greed that has held the nation to ransom.


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