The scarcity of abundance

BY OLU GBOYE

I could flip the title of this article to read The Abundance of Scarcity, and it would still hold true for Nigeria, for there is scarcity aplenty and what is abundant is hard to find. The thoughts surrounding this piece first came to me sometime in mid-2016 when the perennial scarcity of petroleum products paid us the usual visit. I could very well have written it then as now, for again, as 2017 bade farewell and took a stroll into history, we were once more flung into another round of scarcity, and we are still in it. How long? Statements credited to the Minister of State for Petroleum, Dr. Ibe Kachikwu, indicate that the harrowing experience of endless queues and keeping vigil at fuel stations will be with us for another 18 months.

In case you forgot, we are tagged and parade ourselves as an oil-producing country. This begs the question, “How could something so freely given, be so scarcely available?” Nigeria is the 6th largest oil exporting country in the world and boasts of reserves well in excess of 37 Billion Barrels! One would expect that given this abundance, Nigeria would not only have a cornucopia of refined petroleum products, but also play a dominant role in supplying the world with them.

Quite paradoxically, the reverse is the case – Nigeria imports PMS (Petrol), AGO (Diesel) and DPK (Kerosene) for its national consumption needs. To this casual mind, this makes little sense. It is akin to a restauranteur dying of starvation while sitting in his own restaurant, and dishing out food to others; or a very liquid bank with a huge deposit base collecting loans from other banks on behalf of its customers. As preposterous as this may sound, it is, unfortunately, the Nigerian reality.

A good question to ask at this point is, “Why would an oil producing country resort to the importation of refined petroleum products?” The answer should have been simple but is made complex by explanations advanced over time by politically minded government spokespersons. I will however attempt to advance a simple reason – despite gulping inordinate and disproportionate billions in hard currency for Turn Around Maintenance (TAM), the four refineries in Nigeria, which are government-run, don’t work primarily due to operational and administrative inefficiencies. These refineries have a combined capacity of 445,000 barrels per day, but according to the NNPC they were operating at just about 37% of this as at January 2017. Reports indicate that capacity utilization dropped to 23%
by mid-2017. It is necessary to state that even if the refineries were operating at their full installed capacities, they would only whip out 19 million liters of PMS per day, which is a far cry from the daily  2 national consumption of circa 35 million liters (some estimates put our daily consumption at 55 million liters per day). In summary, Nigeria also has a scarcity of refineries!

In order to cover up for the inexplicability of incessant scarcity cycles in the midst of teeming abundance, successive government administrations have over the years employed seemingly different models of subsidies and equalization, so as to deliver petroleum products to its citizens at ‘standardised and reasonable’ (not economic) rates. I call them political rates. A few past presidents have toyed with, and indeed lost, political capital by attempting pump price adjustments that push the retail prices of these products in the direction of market forces and realities. The unsustainability of these artificial price regulations through subsidies has one major symptom that presents itself
occasionally.

FUEL SCARCITY!

These subsidy schemes have also been fraught with wholesale corruption, thus dealing a double whammy on the economy. So, why not build more refineries or open the door to private investors to set up modular refineries?
BIG question! The absence of a clear law for administering the Oil and Gas Sector has been a major contributor. The Petroleum Industry Bill (which the National Assembly recently split into four components) has been decades in the making. Nigeria’s oil industry is a victim of somersaulting somersaults, sometimes subject to the whims of a few (a very minute few!) individuals, thus making it highly unpredictable and way too volatile for many investors. Dangote has dared to take the barrel (bull) by the horns and is currently building a mega-refinery with 650,000BPD capacity that should come on stream late 2019.

It may seem like it but this article is not about fuel scarcity; I have merely employed the current fuel situation to arrest some attention. Scarcity abounds on a multi-sectoral level in Nigeria. It is almost uncanny that the state of the downstream petroleum industry as painted above, pervades almost all sectors of our national life. I will cite but a few:

HUMAN CAPACITY DEVELOPMENT

The National Universities Commission has a listing of 160 accredited universities in Nigeria (40 Federal, 46 State and 74 Private). Put together, these universities churn out no less than 600,000 graduates per year. This is not counting graduates of Polytechnics, Technical Institutions, Colleges of Education etc., for whom graduating data is hard to aggregate.

Less than half of these graduates are able to secure employment. The quality and relevance of training they received is a different matter altogether. Despite the plethora of learning citadels, there is a dearth of qualitative education.
A plenteous, young and energetic population regardless, we are plagued with very low productivity per capita. Let me squeeze in the Research Institutes and Agencies at this point. Nigeria boasts more than 50 scattered across the country, with annual budgetary allocations running into several billions of Naira.

Innovation is the child of research, but these Institutes appear to have recurrent miscarriages, with hardly any patent or groundbreaking discoveries attributable to them. It is difficult to leave politics out of this. There is an overwhelming talent pool of Nigerians who have distinguished themselves in private and public service all across the world, but the preponderance of not-so-qualified (clueless in some cases) persons in our political landscape is made glaring by the sub-par quality of governance we have had to put up with over time. This leadership lacuna spans
all tiers of government in the country. Much politicking, very little governing.

AGRICULTURE

Of the available land space on earth, Nigeria occupies 923,768 square kilometers. Over 708,000 (77%) of this is arable. From food crops to cash crops, there is a wide array of products that the rich Nigerian soil can gift to humanity. Almost every square inch of land in Nigeria has the capacity to grow something – rubber, cocoa, rice, cassava, countless fruits and vegetables etc. It must be said that there have been some positive strides here, but it is worrisome that the country continues to remain a net importer of food items.

Let us take tomatoes for example – according to Proshare, Nigeria is the leading producer of tomatoes in Sub-Saharan Africa (and 13th in the world), with an annual output of 2.4 million tonnes. Regrettably, most of it goes waste and Nigeria consequently has had to rely on imports (particularly of tomato paste and concentrate) to meet its consumption needs.

POWER

It is argued that Nigeria’s power generation has hit the 7,000 megawatts mark. Considering that we were below 3,000MW for years on end, this may appear like good enough reason to roll out the drums in celebration. Not just yet! Firstly, when you consider that only a meagre 4,600MW of this gets distributed ultimately, and secondly, when a comparison is made with countries with similar population sizes – Brazil-135,000MW; Pakistan-24,000MW. Egypt and South Africa with far lower population figures of 96 million and 56 million, generate 38,000MW and 46,000MW respectively.

A World Energy Survey study conducted in 2014 showed that per capita electricity supply in Nigeria  ranked among the poorest in the world, amounting to 155 KWh, compared with 384 KWh for Ghana, 4,410 KWh for South Africa and 15,904 KWh for Qatar. It is unlikely that these figures have changed significantly given population growth and the marginal change in generating capacity.

That said, Nigeria has tremendous natural gas reserves (estimated at 192 Trillion Cubic Feet) that can drive thermal plants that provide electricity for the entire African continent. We also have more than sufficient sunlight for solar generation, enough dams for hydro-electricity, and if we choose to use a ‘dirty fuel,’ coal in excess. But alas, the darkness persists, mingling the murmurings of the populace with the hesitant thumpings and groanings of power generators!

I could go on and on – we have a myriad of healthcare facilities (private and public hospitals), but pitiable healthcare; we have scores of engineers but there is a huge infrastructural deficit; we are heavy on religion, but thin on moral rectitude – however, it is not in my character to merely bemoan circumstances. My preference would be to advance suggestions for improvement, but it is always best to first dimension the issues. We have heard, and very truly so, that Nigeria holds tremendous potential. It is the “how” in harnessing this potential that has eluded us for so very long.

In the sequel to this article, ‘Creating Abundance from Scarcity’, I will be laying out a few thoughts on what Nigeria
and Nigerians must do to move this great country forward. Thank you for the time investment you made to read this.