Farooq Kperogi: Conspiracy of price gouging between Dangote and NNPCL – Newstrends
Connect with us

Opinion

Farooq Kperogi: Conspiracy of price gouging between Dangote and NNPCL

Published

on

Farooq Kperogi

Farooq Kperogi: Conspiracy of price gouging between Dangote and NNPCL

I had said to myself and to people close to me that I would never write again on the untenably rising prices of petrol in Nigeria because when I wrote column after column to presage the unfolding petrol-price-inspired cost-of-living tragedy, scores of people across the Nigerian political divide impassionedly disagreed with me because the presidential candidates to whom they abdicated their brains in 2023 also demonized “petrol subsidies” and promised to remove them.

But the extortionate prices Nigerians are still paying for petrol in spite of the well-justified hopes that the coming on stream of the Dangote Refinery would bring down prices—and the blindingly perplexing and never-ending cascade of blame games, accusations and counter-accusations between the Dangote Refinery and the Nigerian National Petroleum Company Limited (NNPCL)—compelled me to revisit this issue.

There appears to be a well-choreographed conspiracy between the Dangote Refinery and the NNPCL to take advantage of Nigerians by keeping petrol prices unjustifiably high. This is somewhat similar to what we call price gouging in the United States.

Price gouging occurs when businesses calculatedly raise the price of goods, services, or commodities to an excessively high level, especially during a crisis or emergency when demand spikes and supply is limited. In the context of fuel, price gouging is said to occur if a company or companies sharply increase fuel prices in response to supply shortages.

Although price gouging typically happens during natural disasters, pandemics, or situations where essential goods become scarce, it can happen anytime. It is, in essence, the exploitation of consumers’ vulnerabilities during critical times. That’s what I suspect is happening in Nigeria now.

NNPCL is the sole buyer and distributor of fuel from the Dangote Refinery. It controls the supply chain and effectively excludes independent marketers from accessing the refinery’s output. That’s not free-market capitalism; that’s state capitalism. That’s not deregulation; it’s regulated deregulation.

But the Dangote Refinery’s price regime is also puzzling. Oil industry expert Mr. Dan Kunle forwarded to me a WhatsApp message that breaks down the landing cost of petrol per liter, which added up to N1107. I haven’t verified the accuracy of the claim, but I assume that it must have some credibility to deserve being forwarded by Mr. Kunle whose knowledge of the industry I have a deep admiration for.

READ ALSO:

The message says “based on publicly available data,” which it admitted “are subject to change and may vary depending on market conditions, exchange rates, and other factors,” Dangote Refinery is exempt from incurring costs related to freight (N86.48), jetty depot (N15.35), storage (N12.58), financing (N34.67), foreign exchange (N23.45), NPA charges (N10.58), NIMASA charges (N5.29), and customs duties (N51.17), and therefore should, by my calculation, charge no more than N518.35 per liter.

So it’s a mystery how Dangote and NNPCL agreed on N766. If Dangote Refinery acquired its crude oil in dollars, did it also cover salaries and operational costs in dollars? Crude oil is just one part of the overall production cost.

What’s more concerning, perhaps, is that ₦766 per liter cost seems to be the expected price even after Dangote begins purchasing crude in naira from the NNPC. How can this be justified, especially when the additional costs associated with exporting crude and importing refined products would no longer apply once Dangote receives domestic crude from October 1st?

Additionally, as my friend Professor Moses Ochonu pointed out during our August 31 “Diaspora Dialogues” show titled “Who Wants to Kill Dangote Refinery and Why,” under existing laws, NNPC is supposed to supply its own refineries with 450,000 barrels per day, which was historically sufficient to meet local demand before those refineries became defunct.

That crude was never meant for export. It only started being exported after the refineries stopped functioning. So, as Professor Ochonu pointed out, why not simply allocate that crude to Dangote Refinery, paying only for the refining process plus a modest commission or profit, and then sell the refined products to Nigerians at more affordable rates?

This approach would involve some level of subsidy, but that’s how the system was intended to function when state-owned refineries were operational. In any case, in spite of the sustained propaganda against subsidies, every serious country on earth dispenses subsidies, including energy subsidies, to its citizens. Nigerians are entitled to a subsidy on a quarter of the country’s crude output, and subsidizing petrol makes sense because of its broad impact on the economy.

Moreover, this method would be far less costly than the inflated and fraudulent subsidies that have been paid for imported fuel over the years.

I am, of course, aware that Nigerians have allowed themselves to be willingly brainwashed into assuming that there is no nexus between “subsidy removal” and petrol price hike. I hope the truth is becoming apparent now.

For example, in my April 29, 2023, column titled “Six Agenda Items for Tinubu’s Success,” I wrote, among other things: “Don’t increase petrol prices by other names. I know that there is now an artfully manufactured consent, particularly among the gilded classes in Nigeria, about the undesirability of ‘fuel subsidy.’

“I don’t care what it’s called, but any policy (call it deregulation, subsidy removal, appropriate pricing, etc.) that results in an arbitrary and unbearable hike in the price of petrol without a corresponding increase in the salaries of workers and an improvement in the living conditions of everyday people will sink Tinubu.

READ ALSO:

“No responsible government shies away from subsidizing the production and consumption of essential commodities for its people. I have lived in the United States, the belly of the capitalist beast, for nearly two decades, and I can tell you that governments at both federal and state levels heavily subsidize petrol consumption—in addition to agriculture.”

In response, a Facebook friend who was inebriated with anti-subsidy propaganda retorted in the comment section: “I beg to disagree on your advice of his administration not removing fuel subsidy which has become [a] cesspool of corruption…. I prefer he use resources saved from its removal on foodstuffs, health and educational facilities as well as increase salaries of workers which PMB has commenced to FG workers with the 40% peculiar allowance to its staff with effect from last January and which arrears was paid with April Salary. Other points raised are apt.”

“At this rate,” I replied sarcastically, “I pray petrol price gets to 1,000 naira per liter so that everyone will get a taste of what I’ve been talking about.”

“Speculation, speculation and speculation!” he shot back. “Govt should be encouraged to put the refineries in good shape and encourage more private investors to build more just as Dangote and Ishiaku Rabiu [sic] are doing. All refineries should be supplied crude oil in naira and not buying in international oil prices in American dollars. Market forces would later force the prices down if monopoly is not allowed to fester just as happened when telecommunication was privatised and mtn simcard was 30k, others like Mtel, Glo, etc forced the price down and now costs next to nothing.”

Two weeks ago, I reminded him of our April 29, 2023, conversation and asked if he still stood by his arguments and what he thought about the N1,000 per liter prediction I made, which he had dismissed as “speculation.” I am still awaiting his response as I write this.

Well, Nigerians were flushed with enthusiasm at the prospect of the operation of the Dangote Refinery. They expected it to help reduce fuel prices, but the monopolistic control of NNPCL and the caginess and opacity of Dangote Refinery itself have spawned a jarring disconnect between expectations and reality.

As I have repeatedly pointed out, Nigeria, as an oil-producing country, should not withhold the reasonable expectation that its citizens benefit from lower fuel prices. To suggest otherwise is akin to giving someone a handful of cream while allowing their skin to remain parched — an act of neglect that borders on cruelty. Nigerians could more easily reconcile with elevated petrol prices if their country were not blessed with abundant oil resources.

Denying citizens the fruits of their nation’s wealth is no different from a wealthy parent who starves their own children while justifying the neglect by pointing to the deprivation of their less fortunate neighbors. Such a parent is not only irresponsible but unworthy of the trust and care of their children.

Farooq Kperogi: Conspiracy of price gouging between Dangote and NNPCL

 

Farooq Kperogi is a renowned columnist and United States-based Professor of Journalism. 

Opinion

Edo polls and the famous product vendor, by Azu Ishiekwene

Published

on

Azubuike Ishiekwene

Edo polls and the famous product vendor, by Azu Ishiekwene

BY his admission, Senator Adams Oshiomhole is a lousy product vendor. In the real commercial world, his premises would have been closed and his products banned.

But in politics, crime multiples grace. Oshiomhole dragged Godwin Obaseki into the governorship race in 2016 when the odds were against him. Obaseki’s daytime job was minding his business at Afrinvest, a financial services company he founded. But he soon landed a side hustle as chairman of the Edo State Economic and Strategy Team in Osadebey House, Benin.

When Oshiomhole wanted to hand over the baton in 2016, after two terms as governor, Obaseki, the Lagos Boy, didn’t look like it. He was not sellable. Pius Odubu, the deputy governor, was in good stead and seemed favoured to get it by most accounts.

Tinubu-Fashola model

But Oshiomhole wanted to replicate the Tinubu-Fashola template in Lagos. He wanted to be the Tinubu of Edo and to make Obaseki, the technocrat and worldly-wise businessman, the Fashola. That was how Odubu, the local politician and village man, lost out.

A Lagos-based multibillionaire with a sprawling business empire also backed the plan, which finally earned Obaseki the ticket as a candidate for the All Progressives Congress, APC. Oshiomhole portrayed Obaseki as a genius, the special one that the Edo people had been waiting for while demonising his challenger in the Peoples Democratic Party, PDP, Osagie Ize-Iyamu.

As I said in an article at the time, there was no name that Oshiomhole didn’t call Ize-Iyamu, except the name his parents gave him: Osagie. This man, he said, was a lousy product, undeserving of the vote of the Edo people.

READ ALSO:

 

Short honeymoon

Genius Obaseki won, but the honeymoon didn’t last. It didn’t take one year before he fell out with his promoter, Oshiomhole. The disagreement was not about performance or party programmes. It was about whether or not Tony Anenih, Oshiomhole’s mortal enemy, should have been given a state burial and also about control of the state’s resources.

The off-season governorship poll in Edo made matters worse. Obaseki inherited a parliament installed in 2015 when Oshiomhole was governor, and the lawmakers’ reelection in 2019 came one year ahead of Obaseki’s. He managed to work with the lawmakers for the first three years of his tenure because they were all predominantly members of the same party.

When he switched to the PDP after he was denied the APC governorship ticket in 2020, a predominantly APC parliament fiercely loyal to Oshiomhole was in place. The House was a lion’s den, and Obaseki knew he would have had to plot his survival if he won reelection. Oshiomhole went around Edo State begging voters to forgive him for selling them a “bad product,” the same product he used his mouth to advertise as a genius deal in 2016.

This time, he offered them Osagie Ize-Iyamu, whom he had demonised and written off four years earlier as the rebranded new deal. Of course, voters rejected the offer. Obaseki, who had defected to the opposition PDP with his deputy, Philip Shaibu, won the election.

To survive, Obaseki governed with a hobbled parliament. Over half of the state lawmakers were camped in Oshiomhole’s house in Abuja because the governor refused to swear them in.

Vendor begs again

The vendor has been begging again for the sins he committed against the Esama of Benin, Chief Gabriel Igbinedion, hoping that forgiveness might also pave the way for the APC’s candidate, Monday Okpebholo, in this weekend’s governorship election.

It won’t be long before we know what the voters think. The stage is set for a three-way race among Okpebholo (APC), Asue Ighodalo of the Peoples Democratic Party, PDP’; and Olumide Akpata of the Labour Party, LP.

According to the election watchdog, Yiaga Africa, there are 17 parties with about 2.6 million registered voters. For nearly two-and-a-half decades, the political contest in Edo has been between two parties – until last year’s presidential election altered the landscape, producing a result that gave Labour 56.97 percent of the votes cast in the presidential election, a senator, and a member of the House of Representatives.

The battlegrounds

The battle this weekend will be fierce in two senatorial districts – Edo Central, where the two leading candidates, Okpebholo and Ighodalo, are from, and the South, which produced a senator and a federal House member from the Labour Party and is also the stronghold of Obaseki and his ally and former SSG, Osaradion Ogie.

READ ALSO:

It was in the Central, formerly a PDP bastion, that Okpebholo defeated Clifford Ordia, a two-term senator. This weekend’s contest gives Okpebholo a chance to prove his victory was not a fluke in an election where the two leading candidates, both from this constituency with the least local governments (five) and lowest number of registered voters 440,514 (16.68 percent), have everything to play for.

The South is the main battleground, the state’s vote bank with 1,526,699 (57.81 percent) registered voters and seven local governments. It is also crucial to the outcome for other reasons. Apart from being the governor’s base and the home of the Labour candidate, it is also the most cosmopolitan, partly explaining the Labour Party’s emergence as a force.

The South is where the governor’s record in the last eight years and the credentials of those who want to succeed him might face the strictest scrutiny. Yet, like most elite populations, it is also the most unreliable in outcomes. If it rains too much, the weather is too hot, or the fear of violence becomes a clear and present danger, the elite has an excellent excuse to shun the poll and sit at home.

With the APC and PDP threatening to make the election a do-or-die affair and allegations by the PDP that the APC plans to use force and intimidation to rig the poll, low voter turnout, especially in urban areas in Edo South, is a clear and present threat. This danger may erode any benefits for Ighodalo from the combined forces of Obaseki and Ogie from Oredo and Ikpoba Local Governments and tip the scales in favour of the APC and Labour Party candidates.

Not on the ballot?

Oshiomhole is not on the ballot. His reputation as one of Edo’s most famous product vendors of the past eight years is. With six local governments and 673,794 (25.51 percent) registered voters, Edo North, Oshiomhole’s home base, is the second-largest vote bank in the state. It is also the base of Philip Shaibu, the stranded deputy governor.

I guess that Obaseki’s style – not to mention his take-no-prisoner politics, a bad habit he may have inherited from his estranged promoter, Oshiomhole – may have further alienated him and reduced the chances of his candidate, Ighodalo, making significant inroads in the North. Prominent people in PDP who sheltered Obaseki from vagrancy in 2020 against whom he turned his back are waiting to take revenge.

Will it be the triumph or perhaps the redemption of the product vendor? Will President Bola Ahmed Tinubu get his vindication four years after Obaseki’s campaign mocked him with, “Edo no bi Lagos?” Or will this be Obaseki’s chance to affirm himself as the new political force in Edo and shut down the production factory of the decorated lousy product vendor once and for all?

*Ishiekwene is Editor-In-Chief of LEADERSHIP and author of the new book Writing for Media and Monetising It.

Edo polls and the famous product vendor, by Azu Ishiekwene

Continue Reading

Opinion

Ogun Waterside: Path to political recovery

Published

on

Ogun Waterside: Path to political recovery

We are the makers of our own history, we have a statutory right to make a choice, it is however necessary to select the platform and purpose of which we make a choice today that becomes history tomorrow.

Firstly, let me apologize to APC leaders in Ogun Waterside, for making open this message which would have otherwise, be private and enclosed. But the ongoing events and our preparation for the forthcoming statewide local government election dictates my choice of bringing the message to public domain.

Ogun Waterside local government has ten electoral wards, eight of these wards are predominantly occupied by the indigenous owners, the Ijebus, while the remaining two wards accommodate the Ikale & Ilaje

Election is a game of number, In any election, majority dictate the space, this of course, has always been the case in all past elections held in the local government area. Past records of elections in Ogun waterside has always seen Ijebu, the rightful owners of the land producing chairman, while the position of vice chairman or SLG is ceded to Ikale & Ilaje for sense of belonging.
This political arrangement has always produced good result.
As the selection process for a candidate as the chairman of the local government commences, it is necessary to advise our political leaders in all the political parties in the waterside to promptly give consideration to the owners of the land.
The holy book, the Bible, says “love your neighbours as yourself”; we should ask ourselves what we stand to gain if we unconsciously commit our land and the administration of our valuable resources in the hands of co-inhabitants who migrated from Ondo State.
Ogun Waterside Local Government is blessed with great and mighty men and women. We cannot afford to trade off our tomorrow in exchange for a plate of porridge.
The number of residents and inhabitants of the two wards in Ikale & Ilaje areas, if put together, cannot match a ward in the areas occupied by the Ijebu.
As much as we recognize the constitutional and minority rights of our neighbours, the Ikale and Ilaje in Ogun Waterside, we should not also forget the indigenes’ rights of the owners, the Ijebu.
Therefore, it is morally justified if leaders of APC in the waterside urgently consider the danger of returning the local government to the opposition.
Giving the chairmanship ticket to a non-indigene of the local government is like imposing the co-inhabitants over the rightful owners. The consequence will be too grievous.

The people in the local government have made a choice, our leaders, the custodians of our cherished culture, our traditional rulers must do the right thing today that will justify our existence tomorrow.
The will of the masses must be respected.

Signed:

*Deacon Obatungashe I. Adebayo*
Waterside Vanguard.

Continue Reading

Opinion

Why only Nigerians call petrol PMS – Farooq Kperogi

Published

on

Farooq Kperogi

Why only Nigerians call petrol PMS – Farooq Kperogi

I am taking a break from political commentary to everyday language usage this week. A few weeks ago, a British journalist who writes about oil and gas wrote to thank me for past articles I wrote that explained why Nigerians call “petrol” “Premium Motor Spirit.”

“While I have always assumed PMS meant petrol I never knew exactly why this term was so widespread in Nigeria!” he wrote. This email inspired me to republish parts of what I wrote about this.

There is a widespread misconception in Nigerian journalistic circles that “premium motor spirit” is the proper name for petrol, and this misconception appears to be percolating into wider popular usage.

Almost without exception, Nigerian newspapers refer to petrol as “premium motor spirit” or PMS. In fact, “petrol” is typically represented as the alias of “premium motor spirit.” In other words, Nigerian newspapers mislead their readers into thinking that everyone in the English-speaking world recognizes “premium motor spirit” as the real name for “petrol.”

Take, for instance, this 2017 lead from one of Nigeria’s best-edited online newspapers: “Premium Motor Spirit, otherwise known as petrol, is selling at N500 per litre in the black market in Kaduna State as government began enforcement of ban on sale of petroleum products in jerry cans.”

Almost all Nigerian newspapers feel the need to refer to petrol as “premium motor spirit” and to signal that the rest of us linguistically unwashed plebeians call it “petrol.” It never ceases to provoke loud hearty laughter in me each time I read it. It’s my go-to linguistic comic relief.

READ ALSO:

Well, only Nigerian newspapers, and the people who are influenced by them, call petrol “premium motor spirit.” It’s an entirely meaningless phrase to native English speakers in America, Britain, Canada, Australia, and New Zealand. It also makes no sense to English speakers in India, Pakistan, Hong Kong, Singapore, and other Commonwealth countries where English is spoken as a second language.

In 2012, I asked several of my American friends, colleagues, and students what the phrase “premium motor spirit” evoked in them. They all said they had never encountered the phrase and had no clue what it meant.

I searched the 520-million-word Corpus of Contemporary American English (COCA) to see if any American English speaker has ever used the term. I got no matching record. I also searched the 400-million-word Corpus of Historical American English (COHA) to find out if any American ever used the expression between 1810 and 2009. Again, no luck.

I thought, perhaps, the phrase would be familiar to British English speakers, so I searched the British National Corpus to see if there is any record of its use in British English. I had no luck, either.

Finally, I searched the 1.9-billion-word Corpus of Global Web-Based English, which indexes English usage in 20 different English-speaking countries. I had some luck this time around. I got 53 matches. But of the 53 matches for “premium motor spirit” that turned up in the database, 49 came from Nigerian English users, 3 from Ghanaian English users, and 1 from a Kenyan newspaper.

When I followed the link to the Ghanaian sites that used “premium motor spirit,” I found that the writers were Nigerians who were based in Ghana. The fact that Kenya is the only other country where “premium motor spirit” was used, even if only once, as an alternative name for “petrol” alerted me to the fact that the word probably has British English roots.

Origins of “Motor Spirit”
My hunch was right. Although the term enjoys no currency in contemporary British English (as evidenced from its complete absence from the British National Corpus), it actually started life in Britain some 200 years ago.

READ ALSO:

Carless, Capel & Leonard (now renamed Petrochem Carless Ltd), one of Britain’s first oil companies, was the first to use the term “petrol” in English, in 1870, to refer to refined petroleum products, which weren’t used to power cars at the time.

By the 1930s when petrol became the fuel used in internal combustion engines, Carless, Capel & Leonard applied to trademark “petrol” so that the company’s competitors (who frequently used the term “motor spirit” to refer to their product) won’t be able to call their product “petrol.”

But the application was denied because the use of “petrol” to refer to refined petroleum products, derived from the French petrole (ultimately from Medieval Latin petroleum, which literally means “rock oil,” from the Latin petra, which means rock or stone, and oleum, which means oil) had become widespread by the 1930s in Britain.

With the denial of Carless, Capel & Leonard’s application to trademark “petrol,” other British companies that had referred to their product as “motor spirit” freely adopted “petrol” as the name of choice for their product, and “motor spirit” fell into disuse.

“Premium” wasn’t an invariable lexical component of the name. The “premium” in the name refers to the grade of the product. There are three major grades of petrol in the UK: “ordinary unleaded,” “premium or super unleaded,” and “leaded four star.”

In the US, petrol, which is called gasoline (or gas for short), has the following grades: “Regular,” “Mid-grade or Plus,” and “Premium.”

Saudi Arabia has “premium” and “super premium” grades of petrol. Many other countries have several names for different grades of petrol.

So “premium” is one of at least three adjectives that could modify “motor spirit” when “motor spirit” enjoyed currency in Britain. There could conceivably have existed “ordinary unleaded motor spirit” or “leaded four star motor spirit”—or whatever names existed at the time for grades of motor spirit in Britain.

In other words, calling petrol “premium motor spirit” is the same thing as calling petrol “premium petrol” now, even though there are other grades of the product.

Interestingly, Nigeria is one of only a few countries in the world where petrol is ungraded. Maybe that is why our journalists assume that every petrol is of a premium grade and therefore call petrol “premium motor spirit” (never mind that “motor spirit” is obsolete).

Premium Motor Spirit a Scientific Name?
A few people have asked me if “premium motor spirit” is perhaps the scientific name for petrol since Nigerian oil industry experts, including academic researchers in petroleum studies, liberally use it. No, it’s not. There isn’t one specific scientific name for petrol.

As I said earlier, “motor spirit” is the archaic British English name for petrol, and “premium” indicates the grade of the “motor spirit.” Today, most British speakers have no idea what “motor spirit” means and would be even more puzzled by the permanent modification of the term with “premium.”

It’s mystifying that Nigerian journalists—and Nigerian academics— are about the only people who are still wedded to a phrase that died in Britain in the 1930s.

Note that different countries have different names for petrol. Most people know that Americans and Canadians call it gasoline. Germans and people who are influenced by German linguistic traditions call it “benzin,” which is derived from “benzene,” a constituent part of petrol. The French from whom the British borrowed “petrol,” now call it “essence.” Spanish-speaking people call it “gasolina.”

I also find it intriguing that Nigerians use the American English “kerosene” instead of the British English “paraffin” as the term of choice for lamp oil.

Maybe Nigeria should formally adopt “motor spirit” as its national name for petrol. After all, petrol is the “spirit” that moves “motors,” which is the alternative name for vehicles in British and Nigerian English.

Why only Nigerians call petrol PMS – Farooq Kperogi

Farooq Kperogi is a renowned newspaper columnist and United States-based Professor of journalism.

Continue Reading

Trending