How did Africa's largest oil producer almost run out of gas? - CNN

(CNN) Nigeria is the biggest exporter of petroleum in Africa and one of the world's largest exporters, it is also the one country in the world where its citizens often have to live through months of fuel scarcity. This is not the only paradox that defines Nigeria but it is one of the most telling of its many ironies. The current fuel scarcity cannot be isolated from the history of petroleum export and fuel supply in Nigeria.

Opaque Oil Sector

Nigeria's national oil company, the Nigerian National Petroleum Corporation (NNPC) can pass for the darkest place in the world. The reason is because despite several probes and external audits over the years, no one knows exactly what happens inside the NNPC. It is both a regulator of the oil sector and a direct participant in oil exploration. It manages the subsidy process while also managing the country's earnings from petroleum. One thing has been consistent with the NNPC over the years, though: corruption. Between the numbers projected by former Central Bank of Nigeria Governor, Emir Muhammadu Sanusi II and the audit report of PriceWaterhouseCoopers, at least $18.5 billion might have been diverted by the NNPC. The continued existence of the NNPC as it is means fuel scarcity as Nigerians have always known it.

Power Cuts

As at the last count, Nigeria is currently generating about 1000MW of electricity. This would have normally passed without making the news, but at a time of fuel scarcity, the demand for petrol and diesel are bound to further expose the shortage of fuel. Like most people, Nigerians need petrol to fuel their vehicles, but (unlike most people) many Nigerians need more petrol to fuel their power generators than they need for their cars. The power cuts made the fuel scarcity even more biting.

Government waste

Nigerians are angry with leaders who have rewarded public officers with unjustifiable salaries and allowances. For most citizens, lawmakers' pay is out of line with the reality in the country. Lawmakers in Nigeria are reported to be the highest paid in the world, and in a country with a minimum wage of $90.00, the disparity is startling. As a result of this, Nigerians have come to see fuel subsidies as their own right to "eat from the national cake." Were public officers to drastically reduce their salaries and allowances today, one of the most telling reasons the fuel scarcity continues to rear its head would be dealt with once and for all. That reason is the fuel subsidy.

Fuel Subsidies

This is why fuel shortages have become a recurring norm in Nigeria. Fuel importers; referred to as "the oil cabal" or "fuel marketers" have proven to be more powerful than the Nigerian government. In 2011, the Jonathan administration budgeted about N245 billion (then $1.6 billion) to subsidize the public's consumption of fuel. At the end of that year, however, it emerged that about N2.6 trillion (then $15 billion) had been expended. This anomaly has gone down as one of the biggest heists in Nigeria's history. As at the time of writing, no major culprit has been brought to book in what government committees and the National Assembly have concluded to be the fuel subsidy scam of 2011.

This subsidy scam prompted the government to push for the removal of subsidies, which went ahead in January of 2012. The #OccupyNigeria movement was born as a result of this, as most Nigerians insisted on the government dealing with the oil cabal and corruption and reducing its own salaries and allowances before contemplating the removal of subsidies. The government did partially have its way, as petrol pump prices went from N65 (about 30 cents) to N97 while promising to cut corruption and re-invest the money made from subsidy savings. SURE-P Subsidy Reinvestment Programme was created but it has since been enmeshed in corruption.

Corruption

Everything, or at least almost everything, in Nigeria rises and falls on corruption. Corruption has become the life blood of the subsidy regime, while being the central nervous system of the government. As a new administration steps in, many Nigerians expect the subsidy to be removed. The fuel subsidy challenge is certainly one of the most controversial issues awaiting incoming president Mohammadu Buhari. One thing is certain though, Nigerians will fight to keep the subsidies until public officers make certain commitments, the most telling of which is their salaries and allowances. Until then, the shutdown of Nigeria or "Naijacalypse" continues.