Experts pick holes in ICT Policy draft

Report written by DAYO OKETOLA | Published in the Nigerian Punch Newspaper | MARCH 12, 2012

Information Communications Technology stakeholders, who discussed the draft ICT policy document at a public forum in Lagos, on Friday, offered constructive criticism to make the policy more robust for industry growth, writes DAYO OKETOLA

There was a deluge of constructive criticism against the draft National Information and Communications Technology policy released by the Ministry of Communications Technology on January, 9, 2012.

Most stakeholders, who gathered at the Lagos City Hall, venue of the public forum on the draft ICT policy documents on Friday, offered more constructive criticism of the document than commendations.

From simple shortcomings such as the composition of the Ministerial Committee on ICT Policy Harmonisation to complex issues regarding the substance and content of the policy, which experts said lacked depth and was not inclusive enough for holistic transformation of the ICT industry, the forum created an opportunity for stakeholders to air their views on the ICT policy.

Experts said the policy harmonisation committee, which consisted only members from agencies under the Ministry of Communications Technology, was not representative enough as it failed to include private sector players who were the real drivers of ICT growth in the country. As such, they called for the immediate re-composition of the committee.

To the more critical issues, however, stakeholders generally criticised the policy for not making adequate provisions for broadband and computer penetration; tackling multiple taxation and regulation, and providing support for local computer manufacturers.

Other shortcomings, according to experts, include inadequate provision for women, children and people living with disabilities; inadequate provisions for local content and Internet governance; as well as proper convergence in the ICT sector and failure to make provisions that will categorise ICT equipment as critical national infrastructure fully protected by the government.

More specifically, the Nigeria Computer Society expressed worry that the policy did not set a target and time line for broadband penetration, which currently stands at seven per cent in the country.

In view of this, the Chairman, Education and Manpower, NCS, Dr. Vincent Asor, said it was important for the government to drive broadband penetration in the country. He urged the government, via the draft ICT policy, to target a 50 per cent broadband penetration within a stated time line.

Omobola Johnson
Minister of Communications Technology, Mrs. Omobola Johnson. Photo credit: Nigerian Punch Newspaper (file)

Asor further said it was equally imperative for the country to focus on outsourcing as an economic enabler as it was done in India.

The President, Information Technology Association of Nigeria, Mrs. Florence Seriki, who also doubles as the Chief Executive Officer, Omatek Ventures Plc, lamented the poor PC penetration in the country, adding that the IT segment of the ICT industry was not properly provided for in the draft policy document.

Seriki, who called on the Federal Government to drive local PC manufacturing as the epicentre of ICT industry development in the country, said, “We want to develop IT industry but we cannot achieve this without encouraging local manufacturing of PCs and other IT devices.”

The ITAN president, who emphasised the need to establish IT departments in schools across the country, said the draft policy document must specify policies for youth empowerment, foreign investments, and local content.

She argued that there was no way the ICT policy would make significant impact without developing manufacturing in the IT sector.

The Omatek boss explained that the policy enjoyed by local Original Equipment Manufacturers during former President Olusegun Obasanjo’s regime was no longer there and this was affecting their operations.

In view of this, Seriki urged the Minister of Communications Technology, Mrs. Omobola Johnson, to facilitate the restoration of those policies for the benefits of local OEMs in the country.

Speaking in the same vein, the President, Computer and Allied Products Dealers Association of Nigeria, Mr. Tuni Balogun, called on the Federal Government to encourage local PC manufacturing in the country.

He stressed that this was important if the country wanted to be self reliant in the area of ICT development like countries such as India and China among others.

The President, National Association of Telecoms Subscribers, Mr. Deolu Ogunbajo, said the draft policy didn’t make enough provisions on how to tackle multiple regulations and taxation in the country.

While urging the ministry to focus on those areas, Ogunbanjo advised the Federal Government to categorise telecoms equipment as critical national infrastructure fully protected by the law.

The Executive Director, Development Information Network, Mr. Bankole Olubamise, recalled that the draft policy document failed to make any provision for women and children despite mentioning them in the opening of the document.

He advised that the Ministry of Communications Technology should adopt universal access to ICT as a human right.

“ICT divide is still very wide in the country. There is no way we can achieve vision 2020 with the current ICT access,” he said.

According to him, Internet governance is an important issue that the draft policy document does not mention. He also advised that this should be looked into.

Similarly, the Vice-President and Chief Executive Officer, Global Network for Cybersolution Limited, an anti-cybercrime campaign and cybersecurity solution organisation, Mr. Segun Olugbile, said the draft policy failed to make provision for cyber security in the country.

He said this against the backdrop of the rising cyber fraud and insecurity in the country’s cyber space and urged that measures should be put in place to address the problem through the ICT policy.

According to the President, Open Source Association of Nigeria, Mr. Dele Adesomo, open source is a key area in most developed countries’ ICT policies. He called for adequate policy provision for open source in the country while urging the government to encourage mobile software applications locally.

Despite the robust growth recorded in mobile telephony, the lack of convergence in the nation’s ICT sector has been said to be responsible for the fragmentation and inefficiency in the management of resources in the sector.

Experts had, therefore, underscored the need for convergence in the ICT sector, in line with the global trend.

They, however, lamented that the draft ICT policy did not provide adequate ICT regulatory framework that could guarantee complete convergence in the sector.

Speaking on behalf of the ICT Publisher Alliance, the Publisher, eWorld Magazine, Mr. Aaron Ukodie, stressed the need for proper convergence in the ICT industry, adding that this was the only way to fast-track the growth of the industry.

According to the document, the main objective of the National ICT Policy “is to create a conducive environment for the rapid expansion of ICT networks and services that are accessible to all at reasonable costs, and for the transformation of Nigeria into a knowledge-based economy.”

The Managing Director and Chief Executive, Nigerian Communications Satellite Limited, Mr. Timasaniyu Ahmed-Rufai, who expressed satisfaction with the level of response received at the public forum, lauded ICT stakeholders present for their constructive crtiticisms.

He said, “The contributions were fantastic. What happened here today was constructive criticisms because in making a policy, you are trying to chart a course. If somebody says don’t go there, there is a pit there; don’t go that way, there is danger there, it is not criticism, it is advice. You will see that it is the ministry that presented itself for criticism because it wants to get all issues addressed. At the end of the day, the policy document that will be released will be an all embracing and comprehensive one that will reflect where we want the ICT industry to be.”

The Minister of Communications Technology, Mrs. Omobola Johnson, said the objective of the public forum was to get critical inputs from industry stakeholders, adding that the contributions would make the final ICT policy more robust for proper execution.

Paper 72: Energy – fuel subsidy

The decision of the Federal Government of Nigeria to remove subsidy on the 1st of January 2012 was ill-timed. There are competing alternatives to the specific decision that offer mutually rewarding and a win-win prospect for the government and people of Nigeria.

The country’s House of Representatives’s resolution asking the executive to reverse the decision strongly indicated that there was no consensus on subsidy at the topmost level of government.

A major argument canvassed by government has been the need to eliminate avenue for corruption and waste and the ultimate need to turn such subsidy expenditure into savings. It is however unlikely that ordinary folks would show sympathy for government’s position or her quest for additional funds if they are yet to see the impact of previous monies. Africa’s most populous nation must therefore actively and effectively utilize existing traceable income from crude-oil to fix her ailing infrastructure and her moribund refineries before embarking upon complete deregulation of her downstream. Such actions would enable the people of Nigeria to have confidence and hope in government.

Nigeria’s Poverty Map

Nigeria poverty map
Nigeria poverty map

About 61 percent of oil-rich Nigeria’s citizens lived in absolute poverty in 2010, existing on less than $1 a day and unable to afford the bare necessities, a report by the National Statistics Bureau stated.

The NBS announced yesterday that the number of impoverished Nigerians “rose to 60.9 per cent in 2010, compared with 54.7 per cent in 2004″.

Statistician General of the NBS, Mr. Yemi Kale, said that even though the nation’s economy is growing, the proportion of Nigerians living in poverty continues to grow every year in Africa’s most populous nation.

Kale explained that the fastest-growing industries in Nigeria – wholesale, retail and oil and gas – “are not significant employers of labour” and without the creation of new jobs, poverty is expected to climb even higher.

Mr. Kale estimates that this trend may increase further in the 2011 report if the potential positive impacts of several anti-poverty and employment generation intervention programmes are not taken into account.

He suggested boosting the agricultural sector, which the central bank estimates accounts for 42 percent of gross domestic product, will aid poverty alleviation in Africa’s top oil-producer.

The report further reveals that the northeast and northwest geo-political zones are the poorest regions in the country while the southwest, which hosts the commercial city of Lagos, has the lowest levels of poverty.

Copyright: Channels Television

Botched Nigeria rescue bid: UK and Italy defuse row

Bullet holes in the building where the men were heldThe house in Sokoto, Nigeria, where the two hostages were held, came under heavy fire Continue reading the main story on BBC


Italy and Britain’s foreign ministers have moved to defuse a row over the UK’s failure to inform Rome of a planned hostage rescue bid in Nigeria.

Giulio Terzi and William Hague issued a statement saying Italy and the UK would continue to fight terrorism together.

Briton Chris McManus and Italian Franco Lamolinara died on Thursday as Nigerian and UK forces tried to free them from Islamists in Sokoto in Nigeria’s north.

Mr Terzi had asked Britain for “utmost clarity” about the operation.

He met Mr Hague earlier at a meeting in Denmark, and on Friday evening they released a joint statement.

It said Mr Hague had made it clear that there had been “a limited opportunity” to secure the release of the hostages whose lives were “in imminent and growing danger” and it had been possible to inform Italy only once the operation was already getting under way.

The statement went on to say: “Mr Terzi expressed deep sorrow and disappointment over the tragic outcome of the operation and both ministers agreed on the urgency of sharing full information to facilitate the reconstruction and understanding of these events.”

“Start Quote

The urgency is evident from the fact that the raid took place in daylight. It was deemed too risky to wait even 12 hours for dark”

image of Gordon CoreraGordon CoreraSecurity correspondent, BBC News
  • It continued by saying they had reaffirmed that the UK and Italy would continue to work together closely in the fight against “such horrific terrorism and hostage-taking”.

After the ministers’ meeting, Italian news agency ANSA reported sources from the prime minister’s office in Rome as saying Italy remained firm in its demands for clarity, but that it had no intention of escalating the diplomatic row.

The BBC’s Alan Johnston, in Rome, said this was the first sign that some of the heat may be going out of this diplomatic row.

The row – which has been rumbling since news first broke of the failed operation on Thursday evening – appeared to peak on Friday afternoon when the Italian president said it was “inexplicable” that the British government had not told Rome about the rescue attempt until it began.

Giorgio Napolitano said the UK needed to explain itself.

The victims

Chris McManus and Franco Lamolinara

“The way the British government has behaved is quite inexplicable. To have failed to inform or consult Italy, with regard to a military action which could have such consequences,” he said.

“A clarification is needed on both the political and diplomatic levels.”

Earlier, UK Defence Secretary Philip Hammond said the attempted rescue had been launched after information was received that the hostages “were about to be moved – possibly executed”.

“These hostages were taken, they were held at an unknown location for a very long period of time despite extensive efforts to track them down.

“And when a window of opportunity became available, a well-trained Nigerian force with British support, went in and tried to rescue them,” he said.

Heavy fighting

Number 10 said the UK and Italy had been in contact ever since the men were kidnapped.

Gunmen seized Mr McManus, 28, of Oldham, Greater Manchester, and Mr Lamolinara, 48, in the town of Birnin Kebbi in the north of Nigeria on 12 May 2011.

They had been working for Italian firm B Stabilini in the construction of a local headquarters for the Central Bank of Nigeria.

Sequence of events

Locator map of Nigeria
  • Arrested suspect gives location of hostages
  • Intelligence received suggesting hostages’ lives at risk
  • Prime Minister David Cameron authorises raid
  • Hostages murdered by the time forces reach them

Italian Prime Minister Mario Monti’s office said he had asked Nigerian President Goodluck Jonathan to provide a “detailed reconstruction” of events as soon as possible.

Mr Cameron’s spokesman said it was a Nigerian-led operation, with UK support involving the UK’s elite Special Boat Service. BBC reporter Haruna Shehu Tangaza, in Sokoto, described several hours of heavy fighting where the men were being held.

The house where the men were being held had been under surveillance for some time.

Mr Cameron and Mr Jonathan said they believed the kidnappers had killed Mr McManus and Mr Lamolinara.

But an unnamed official from the Nigerian state security service quoted in local reports said the hostages had died in crossfire.

Boko Haram

Mr Jonathan said that the men’s captors had been seized and “would be made to face the full wrath of the law”.

He said they were from militant Islamist group Boko Haram, which has carried out a number of attacks on police, politicians and clerics who oppose it.

Reports have emerged that a senior member of Boko Haram was captured on Tuesday, and he gave information which led forces to the house where the two construction engineers were being held.

However, on Friday, a spokesman for the group told reporters that Boko Haram had not been behind the deaths.

“We have never taken anyone hostage. We always claim responsibility for our acts,” he said.

BBC security correspondent Gordon Corera said Boko Haram had become more violent and capable in recent years and there was a suspicion this might be a sign of the growing influence of the group known as al-Qaeda in the Islamic Maghreb.

Al-Qaeda in the Islamic Maghreb has a track record of kidnapping Westerners in north Africa and trying to extract ransom payments to fund its violence.

Development: China gets world fastest train

As China’s economy and population expand, so do its transport needs. Although car ownership is on the increase, the Government is investing more in the railways.
China now has the fastest train in the world. It runs from the central city of Wuhan down to the south coast, at a speed of more than 380km/h.
Jenny Wivell reports.

The best Nigerian Universities: 2011 University Web Ranking

The ranking of universities has generally been a matter of several debates. Though just a few criteria of selection could be unanymously accepted by the scientific community, a european institution has nevertheless published a list of Nigerian universities which it has ranked based on the popularity of their websites.

1  University of Ibadan Ibadan

2  University of Ilorin Ilorin

3  University of Benin Ugbowo and other locations

4  Obafemi Awolowo University Ile-Ife

5  Ahmadu Bello University Zaria

6  University of Jos Jos

7  University of Lagos Lagos

8  University of Agriculture, Abeokuta Abeokuta and other locations

9  University of Port Harcourt Port Harcourt

10  Lagos State University Ojo

11  Federal University of Technology, Akure Akure

12  Babcock University Ilisan-Remo and other locations

13  Ladoke Akintola University of Technology Ogbomoso and other locations

14  University of Nigeria, Nsukka Nsukka and other locations

15  Covenant University Ota

16  Redeemer’s University Mowe

17  Pan African University Lagos

18  Benson Idahosa University Benin City

19  University of Maiduguri Maiduguri

20  Federal University of Technology Minna Minna

21  Federal University of Technology, Yola Yola

22  Ambrose Alli University Ekpoma

23  University of Uyo Uyo

24  Bayero University Kano Kano

25  Usmanu Danfodio University Sokoto

26  Joseph Ayo Babalola University Ikeji-Arakeji

27  Bowen University Iwo

28  Kwara State University Ilorin

29  Micheal Okpara University of Agriculture, Umudike Umuahia

30  University of Ado-Ekiti Ado-Ekiti

31  Nnamdi Azikiwe University Awka and other locations

32  Caleb University Ikosi

33  Bells University of Technology, Ota Ota

34  Delta State University, Abraka Abraka

35  Lead City University Ibadan

36  American University of Nigeria Yola

37  Igbinedion University Okada Okada and other locations

38  Renaissance University Enugu

39  Ibrahim Badamasi Babangida University Lapai

40  Ajayi Crowther University Oyo Town

41  Rivers State University of Science and Technology Port Harcourt

42  University of Mkar Mkar

43  Kaduna State University Kaduna

44  Abia State University Uturu

45  Olabisi Onabanjo University Ago-Iwoye

46  Kogi State University Anyigba

47  Obong University Obong Ntak

48  Federal University of Technology, Owerri Owerri

49  Ebonyi State University Abakaliki

50  Crawford University Igbesa

51  Umaru Musa Yar’Adua University Katsina

52  Salem University Lokoja

53  Enugu State University of Science and Technology Enugu

54  Niger Delta University Wilberforce Island Yenagoa

55  Anambra State University Uli

56  Imo State University, Owerri Owerri

57  Plateau State University Bokkos

58  Osun State University Oshogbo and other locations

59  Adekunle Ajasin University Akungba Akoko and other locations

60  Novena University Ogume

61  Tai Solarin University of Education Ijebu-Ode and other locations

62  University of Agriculture, Makurdi Makurdi

63  University of Abuja Abuja

64  Western Delta University, Oghara Oghara

65  Wukari Jubilee University Wukari

66  Madonna University Okija

67  Bingham University Auta Balifi

68  Ondo State University of Science & Technology Okitipupa

69  Al Hikmah University Ilorin Ilorin

70  Katsina University Katsina

71  Benue State University Makurdi

72  Adamawa State University Mubi

73  Caritas University Enugu

74  Fountain University Oshogbo

75  Nasarawa State University Keffi

76  Bukar Abba Ibrahim University Damaturu

77  University of Calabar Calabar

Source: 4 International Colleges & Universities, July 13th, 2011.

Nigeria, plagued by arrested development

By Ugochukwu Raymond Ogubuariri

Only recently, the President of Nigeria’s Senate – David Mark, had, while delivering his Eid-el Maulud message, stated as follows: “I will defend Nigeria’s unity with the last drop of my blood.” Few weeks earlier, the former military Head of State, Ibrahim Babangida, had equally announced quixotically that “I will call a tailor, take my measurement, get back into khaki to go and fight even at 71.” In apparent reference to the indivisibility of the country, the former dictator had hinted succinctly that he would also be willing to spill his blood to maintain Nigeria’s unity.

To all intents and purposes, it would appear that Nigeria’s governing (and out-of-power) elite are commonly united in their conviction that the only expedient way to dramatize their commitment to the country’s fragile unity is by corrupting the citizenry with the “vow” of doing the impossible. While it has become fashionable for Nigeria’s rulers to luxuriate in the fantasy of pledging to fight and die in defence of the country’s unity, the citizens, on the other hand, seem to have become patronizingly bewitched by their rulers’ heroic pledge that they hardly raise any interrogation about the character of “Nigerian unity,” its real and supposed beneficiaries as well as the political and economic interests which it is configured to serve.

Some elucidation on the whole idea of “unity” will be in order at this juncture since it has become one of the most abused and vulgarized concepts in Nigeria’s political discourse. The term “unity” basically refers to mutual agreement; a state of oneness; or the quality of completeness. It is a situation in which a group of people work together agreeably for the achievement of a particular purpose. It therefore logically follows that the unity of an entity can only be functional if it is fashioned by consensus, driven by purpose and predicated on social inclusiveness.
One of the salient contradictions of Nigeria’s unity is that it is neither consensual nor purpose-driven. It is a unity that is constituted as an end in itself rather than a means to an end. At such, it hardly offers its citizens any plausible sense of belongingness, no prospect of self-actualization and, worst of all, no allowance for equity and social justice.

Nigeria expresses itself as a conundrum that stands in diametric opposition to the solemn interests of ordinary citizens. Invariably, it mandates a relentless erosion of their humanity. It is therefore not surprising that after 51 years of political independence (and much lengthier decades after its illegitimate procreation by a British adventurist – LordLugard), Nigeria’s individuality and statehood as an independent, sovereign nation is still largely embryonic, inchoate and indeterminate. Nigeria has remained essentially a country marooned in the wilderness of truncation, arrested development and aborted dreams.

Politically, we have contrived and nurtured a brand of politics which renounces the norms of civilization and embraces the lure of barbarism. We have promoted an idea of politics that is literally constituted as warfare and prosecuted with every conceivable weapon, including bombs! With corruption so deeply entrenched and leadership incompetence so pervasive, the country has suffered progressive retrogression and has become a classic metaphor of a stillbirth. While pretending to be united in one indivisible entity, we have enshrined the practice of perceiving some sections of the country as “certified infidels” ineligible to aspire for plum positions in the land, including the Presidency.

Socially, Nigeria still satisfies all the requisite attributes of a country that is divided against itself. In today’s Nigeria, it is still inconceivable that an average Ibo trader will choose to reside in any part of the north to ply his trade without inviting the unpleasant animosity and vengeful wrath of bigoted jihadists. By the same token, a civil servant of Yoruba origin who has spent 20 years working in Abia State ministry would count himself extremely lucky if he eventually escapes the repatriation train of Governor T.A. Orji in fulfilment of his “indigeneship” policy.

Economically, the story is even more pathetic and appallingly so. Nigeria, the once revered giant of Africa, cannot boast of even the capacity to manufacture “wheel-barrow bolt.” The only preoccupation of its rulers is the appropriation and embezzlement of crude oil proceeds which, invariably, accounts for over 95 percent of its foreign exchange earnings. The manufacturing sector has become massively decimated that it currently accounts for a paltry 2 percent of the country’s GDP while agriculture is still largely rudimentary and in utter neglect. In the area of education, social infrastructures and security, the story is no less pitiful.
So, when the likes of IBB and David Mark profess their sanctimonious commitment to Nigeria’s unity and its inviolability, are they necessarily doing so because they consider themselves more Nigerian than the rest of us?

Of course, it can’t be. When properly contextualized, they are merely saying so as a way of reminding all of us that “we should not kill the goose that lays the golden egg for them.” In the particular case of the Senate President, it has to be taken into account that he presides over a Legislature that is reputed to be the most expensive (both in remuneration and in corruption) in the entire world. Needless to remind Nigerians that the salary and allowances of an average Nigerian Senator dwarfs that of an American President and would certainly inflict Barack Obama with a sense of nostalgia for his African ancestry.
If so, why would David Mark not be willing to die and spill his blood in defence of Nigeria’s unity,knowing fully well how richly buttered his bread is? Undeniably, if I were to be in his shoes, I would not only spill my blood, but also my urine, my sweat, my saliva and, indeed, everything in my body that is prone to being spilled.

The course of Nigeria’s unity will be better served if the Senate President can muster the moral decency to slash the obscene salary, allowances and perks of his office (and those of his colleagues) by at least 50 percent. Also, the notion of one indivisible Nigeria will translate into a viable proposition if the Senate Presidentcan bestir himself to the task of leading a National Assembly that takes seriously the enthronement and active enforcement of accountability, transparency and zero tolerance for corruption in the conduct of government affairs, especially, by the Executive arm and its various agencies.

Under the watchful eyes of David Mark and the Parliament, corrupt government officials and their cronies in the private sector ruined the nation’s oil industry and converted huge sums of monies meant for subsidization into “a windfall from National Lottery.” Under his leadership, the country’s choicest economic assets were hijacked under the dubious guise of privatization and parcelled to privileged individuals at scrap value. Any idea of national unity which glorifies corruption, impedes equity, fairness and justice, violate the sovereign interest of ordinary Nigerians and places his survival in serious jeopardy can neither stand the test of validity nor elicit the acceptance of Nigerians. At best, it will be received as a meaningless and useless idea!

How To Deregulate Downstream Sector Efficiently, By Esele

Being a presentation of President of  Trade Union Congress of Nigeria (TUC), Comrade Peter Esele, at a  public hearing organised by the House of Reps on the fuel subsidy removal policy on Monday, Jan. 23.


THE government is implementing a policy to remove the subsidy on Petroleum Motor Spirit (PMS) because it argues that the level of subsidy being paid by government is not sustainable particularly as subsidy payment now exceeds the annual capital budget of the Federal government.

Government also makes the case that it is important to deregulate the downstream sector of the petroleum industry and by implication allow market forces to determine the pump price. This will enable government to completely get out of the sector so that it can be fully market driven. It is easily agreed that the subsidy that government declares as paid annually is extremely high and not sustainable without it busting the budget. It is also not indisputable that deregulation of the downstream sector will encourage the investment on new refineries and product reception and Distribution infrastructure with all the attendant benefits. However, deregulation and or subsidy removal have to be planned and executed very carefully so that the desired objective is attained.

A shoddy implementation will mean a deplorable setback for all the stakeholders in the industry. This is why my humble self,  the TUC that I lead and the NLC continue to stand firm that government must have a definitive agenda for this programme in order to guarantee its  complete success which will consequently establish a solid foundation for economic growth of the nation.

It should be established from the onset some of the imperatives that are ignored or swept under the carpet by those who are less informed that blur the debate on this issue. Establishing clarity on these issues will make it easy for government to craft the road map towards the efficient delivery of the programme and to earn the people’s trust through a transparent compact that delivers positive dividends to the people. These imperatives are:

Subsidy on petroleum products is removed by a price increase. It is therefore imperative that the level of subsidy is transparently established otherwise the people will see the policy as efforts by the government to under change them;

Price increase does not necessarily equate with deregulation. Deregulation at a point where there is no subsidy on PMS, for example, will need to be underpinned by competition which is the only way to achieve cost control and efficiency in the sector;

Deregulation that jerks up the price a product but is not underpinned as discussed above amounts to a punitive price increase that transfers the burden of paying the subsidy from government’s pocket to the private pockets of the citizens;

A Price increase that happens outside a truly deregulated environment means that the head of the snake is scourged; the snake is alive and will strike another day. This means that a price increase not backed by deregulation will cause another subsidy debate and skirmish further down the road. And this is not in the interest of all the stakeholders.

If the subsidy is not a real cost that is efficiently incurred but represented by inefficiency and or corruption, the people still end up paying for it in the long run as it becomes a direct opportunity cost of capital formation and a discount of the quality and level of services that the government delivers to the citizens: and

If the people end up paying, in the final analysis, directly from their private pockets at the pump station or by the budget deficiency that it creates if the government pays, it become important that the people should reject the inefficiency and corruption that is necessarily embedded in the price irrespective of who is paying

The people therefore have an inalienable right that the government cleans up the mess before the policy of subsidy removal or deregulation is implemented.

The conclusion to be drawn from the above is that deregulation of the downstream sector is the answer. If such deregulation is properly handled in an atmosphere where the inefficiency and corruption are expunged and a competitive environment is created, the result could be a price reduction and not a price increase. It is this upside potential to have a ‘Win Win’ deregulation which a properly planned and efficiently implemented deregulation engenders by delivering a price reduction rather than a price increase that is the focus of this paper.


Establishing the level of subsidy

The Petroleum Product Pricing Regulatory Agency (PPPRA) was set up by Act No 8 of May 2003 with the primary mission to eliminate the effect of volatility in international crude oil and products and stabilize domestic prices. It also aimed to guarantee effective products availability and distribution nationwide. The Petroleum Support Fund (PSF) Scheme was set up in 2006 to support the PPPRA mission and the PPPRA had the objective to entrench transparency and accountability in the administration of the Fund on petroleum products subsidy.

In administering the Fund, PPPRA instituted a pricing principle which in its own website is a principle “that engenders healthy competition among industry operators, encourages investment and the maintenance of international standards and practice “. In support of this principle, PPPRA created a template to determine the Landing cost of products.

This Landing cost is applied against the Government fixed ex-depot price of the petroleum product. The difference between the landing cost and the ex-depot price of imported petroleum products is the Subsidy.

By all accounts, the PPPRA has completely failed in its stated objective in the sense that

  •  The template is compiled with bloated costs that discourage competition, the pursuit of efficiency and cost control. Rather it is based on total cost recovery and opaque operations thereby encouraging massive corruption and padded economic rent both of which continuously increase subsidy;
  •  PPPRA has been unable to incontrovertibly establish the quantity of products consumed upon which subsidy is paid. Quantity consumed is a fundamental item of the subsidy equation. Failure on this is a confirmation of PPPRA’s failure on its stated mission; and
  •  To the extent that PPPRA does not insist that subsidy is claimed on confirmed consumed products, PPPRA is thereby, perhaps by collusion with the importers, paying subsidy on products that were never delivered, stolen and lost products and products that are round tripped.
  • It is because of the above that we believe that the PPPRA template is deceptive, anti competition and anti-people. This is why we call its Landing cost template ‘a weapon of mass destruction’.
  • In a regulated environment, the first step towards the injection of efficiency into operations is to have a robust template that encourages operators to compete. The present template does not do this.


The Adverse Impact Of PPPRA Template

In a rentier environment, which the PPPRA template entrenches the price that is paid for petroleum products is represented in the following equation:

Actual market price = Market driven cost + inefficiency + corruption + guaranteed profit

It should be borne in mind that the Actual market price is the PPPRA Landing Cost ,which, in itself, is represented in this equation:

Actual market price (Landing cost) = Pump price + subsidy

The above equation clarifies, the impact of inefficiency and corruption on price;

It is needless waste of resources for either government or the people to pay a corruption or inefficiency laden price for petroleum products ;

It behoves on the government to eliminate inefficiency and corruption from Landing cost of petroleum product

A removal of subsidy or deregulation without first addressing the inefficiency and corruption will only transfer the burden to the people and embolden the rent seekers to escalate their activities since the people do not possess the force that government has; and

Deregulation that does not entrench competition will amount to an oligopolistic environment where only the rentiers profit.


Creating a competition oriented template

The PPPRA template was crafted from the NNPC point of view and was therefore based on the following faulty parameters

That all costs should be recovered with a guaranteed margin. Of course, NNPC operates an inefficient downstream sector. This accounts for the over padded costs in the template. There is therefore no incentive for operators to be efficient. Those who strive to be efficient are awarded excess profit. This assumption, which forms the foundation of the template must be reversed.

NNPC operates across the entire downstream sector. Consequently, the template views costs holistically from a single source point of view. This is absolutely wrong and does not represent the activities in the downstream value chain. We consider this to be a wrong approach. The various segments of the business do get outsourced and should be considered as such. For example, NNPC outsources the importation process whilst marketing companies outsource the transportation and retail (dealership) element of product marketing.

In an outsourced basis, the most efficient parameters viz volume throughput, costs or rates should be used as standards and not the worst parameters as currently represented by a template that struggles unnecessarily to make NNPC whole. The standards should shut out the worst performers instead of their inefficient standard being applied as the standard for all.

Following from b above, the PPPRA template applies extensive standard costs in its input. A standard is a norm and whatever is considered normal can be used as a standard. The assumed standard level has a salutary effect on costs and their relationship to unit cost in a cost template like is applied by PPPRA because the theoretical standard set for a level of operations regarded as the ideal or maximum level of efficiency can have a distorting effect if the standard is not set at the correct level. Such a standard will not help to control costs, adequately measure or enhance efficiency and above all, will not promote cost reductions when it is absolutely necessary to do so.  An inadequately determined standard which turns out to be incorrect will not only distort unit cost but lead to inefficiencies.

One of the key issues that ought to have been discussed as a prelude to subsidy removal is therefore the appropriateness or otherwise of the standards that have been applied all through the template. It is still of considerable importance that this should be carefully and extensively reviewed.

An empirical review of actual costs in the template should be carried out in order to reduce the landed cost of products. The actual cost of each element should be properly determined, empirically, in order to ensure that the allowance that is given is adequate and not unnecessarily excessive to the detriment of the government and the consumer.


Eliminating inefficiency and corruption from product importation mechanism

It is imperative that the government set out a transition period of not more than six months when it will take concrete actions to considerably reduce the inefficiencies embedded in the importation mechanism as a prelude to complete deregulation of the downstream sector.

The steps towards achieving this are set out be

  1. Direct NNPC to dedicate all the crude that it cannot refine to offshore processing. This will ensure that NNPC is not selling this crude for its own account. Most importantly, it will ensure that refinery gate prices based on ‘net back’ pricing is obtained
  2. Eliminate guaranteed margins across the product importation and distribution chain – Government should, as a first step towards deregulating the downstream sector, scrap all guaranteed margins in the template including financing cost.

The different segments of the business that comprise the value chain should be clearly identified and the operators in each segment be made to negotiate their margins. The most efficient or standard cost of the item, empirically verified by PPPRA should be used as template input until the sector is fully deregulated by which time margins will become transaction based and built into market determined pump price. This will drive efficiency in the sector.

Sweep and/or dredge the shipping channels

The import jetties have draft limitations which restrict the size of vessel that can be moored alongside the pier. The draughts of the jetties that are used for the importation and marine product movement are: Atlas Cove (11.0m); Apapa (6.4m), Warri (7.4m); Okrika (9.4m); and Calabar (6.4m).

Consequently larger vessels, typically of average size 45,000 Metric tonnes berths at the Single Point Mooring Buoy (SPM, draught limitation 16m) or Fairway buoy in Lagos, Bonny or offshore Escravos for transhipment. The products are transferred into smaller vessels of between 5,000MT and 20,000 MT for onward delivery in ‘daughter’, ‘grand daughter’ and ‘great great grand daughter’ etc vessels to Atlas Cove, Apapa, Warri, Okrika or Calabar, and even direct sales to customers on the high seas.

The above operational system has the following significant negative consequence

• It is more economical to use larger vessels to import products

• Heavy lightering costs are incurred which are built into the landed cost

• Products are easily round tripped through trans-shipment and ocean sales thus creating systemic corruption.

Government should invest on the sweeping and/or the dredging of the above listed ports. It should be noted that PPPRA uses 5000MT as a base to license importers and 30000MT for Landed cost calculation. This is considered scandalous.

The use of 45000 – 50000MT will lead to a significant reduction in landing cost and eliminate the menace of product round tripping. This project can be achieved in less than six months and the pay back is less than a year.


Building Additional more Single Point Mooring (SPM)

Presently, only NNPC SPM and Atlas Cove can take heavy vessels (above 50,000MT) as explained above. In order to improve the product reception infrastructure in support of the swept or dredged jetties, government should build more SPM. These jetties have pipeline throughput availability, thus negating any need to lighter products. This will also reduce if not completely eliminate lightering costs and support the elimination of product round tripping

The government should as a matter of urgency invest in more SPMs. This capital expenditure also has a less than one year pay back.

Removing administrative bottlenecks that delay vessel discharge and causing demurrage

Apart from the vessel discharge bottlenecks whose remedies have been discussed above, the following administrative limitations also cause demurrage:

• Delays in obtaining clearances from DPR, Customs and the Navy.

• Security problems from the Niger Delta militancy activities or from youth restiveness

• Difficulty in settling the ship and shore differences promptly after loading and offloading operations.

• Power outage causing discharge delays

It is imperative that these bottlenecks are removed. This can be done by government directive in less than one week, and should be speedily addressed.

Unbundling of the Pipeline System and creating open access of the pipelines

Some of PPMC’s extensive (5,000 km. pipeline network and 23 depots) product distribution system is currently not in use.  Some sections have been vandalized, and others have just not been adequately maintained, and have doubtful integrity.

PPMC should consider opening the entire network to third party importers and marketers for a throughput fee.  The revenue from such open access should be ploughed into maintaining the system and ensuring, as much as possible, its integrity.

Unbundling will enable marketers to have access from the Jetty head to the storage tank at a fee which will enable them to compare and control their product storage and transmission costs. This will enhance pipeline utilization, reduce bridging and earn PPMC much needed income.

Ensuring Pipeline & Depot Integrity:

Using PPMC’s installed pipeline and depot network would normally be the most efficient way to move products around the country. However, pipeline vandalism and stealing of products are present day realities in our country.  Distribution by road tankers is inefficient and not a viable alternative on the long run.  Government should speedily address this issue before unbunding the pipeline system. This too can be squarely addressed in less than six months.


PPPRA’s template currently apply 14 day demurrage at $28000 day. This is absolutely unreasonable. When the reasons given above for discharge delay are addressed, efficiency will be injected into the process and considerably reduce demurrage .The demurrage rate is a quoted spot rate (AFRA). The rate by day therefore is verifiable. This rate should be applied on an allowable three (3) day demurrage period for both mother and shuttle vessel discharges.

National Strategic Reserve

NNPC has the responsibility to guarantee product security for the nation. The pipeline network and its 26 depots made this task a relatively easy one in the 80s and 90s. The MT TUMA was also in active service in support of this goal.

However, the vessel lost her certificate to operate as a result of not being dry-docked. Consequently TUMA has not been actively engaged since May 2002. .

Consequent on the above, NNPC now relies on vessels in the high seas to provide the strategic reserve. The holding of these vessels on the high seas accounts for a significant portion of the 14 day demurrage that is built into product landed cost. This is wrong as it gives undue advantage to importers who do not have this strategic reserve responsibility.

The M.V. Tuma, a vessel capable of holding 120,000 – 140,000 metric tons of products was, until 2002 anchored offshore Lagos and used as strategic storage for products.  The vessel apparently lost its sea worthiness certification and departed in 2002, (ostensibly for dry-docking) . The Tuma should as a matter of urgency re-enter the system as a PMS storage facility to further reduce demurrage and storage cost.

Paying Subsidy on Products delivered to retail outlets

PPPRA established the following basis of determining the volumes on which subsidy is paid:

Between 2006 and June 2009, the guidelines provided that Claims will be based on the duly verified volume of products lifted out of the depots (Depots belonging to NNPC/PPMC, DAPPMA, Major Marketers and IPMAN) by the PPPRA to approved retail outlets.

Similarly, the PSF Guidelines, issued by PPPRA and effective from June 2009  provided  that Claims shall be based on the duly verified shore tank volume ie the volume of product that was actually discharged in Nigeria.

The method used from 2006 to 2009 meant that subsidy could be paid on products not delivered into retail outlets but smuggled out of the country, the method applied from July 2009 is even criminal as it meant that subsidy could be paid on products that are round tripped, products lost or stolen after delivery and products that are not delivered to retail outlet and therefore never consumed in Nigeria.

Firstly, it is imperative on government to carry out an audit of the products actually consumed in 2006 – 2011 on which the Federation paid subsidy. This is the only way to expose the massive fraud that has been perpetrated against Nigeria.

Secondly, government should legislate that subsidy can only be paid on products delivered to retail outlets and thus consumed in Nigeria.

The issues listed in a – i above are imperative steps that must be taken before deregulation. They can all be carried out in six months and will have the following impact

Taken together, they will lead to a drastic reduction in product Landed Cost. It is the firm belief that PMS would have a Landed Cost of less than N60 per litre after the measures are implemented

Individually and collectively, the measures have a payback of less than one year.

The second issue is the “disconnect” between the government and the people.  This disconnect is epitomized by the following question: who is best able to carry the load occasioned by the garbage of corruption and inefficiency represented in the bloated subsidy?  Is it the government that is currently carrying it on the peoples behalf or the downtrodden, recession stricken masses?

We posit that it is the government for the simple fact that the masses cannot influence or change anything in the system. And the fact that government’s long years of monopoly in the industry created the garbage and so, it must clean it first.

If government abandons the people to the wolves in the sector, it will not take time before they devour the people and tear their bones to shreds.  We are sure that this is not the objective of government.

It is government’s responsibility to challenge the institutional and structural imperfections in the system, take them on, fight them, defeat them and have a lean and fit system to bequeath to the people.  If for nothing else, the structures, institutions, corruption and inefficiencies that threaten to swallow all of us like roaring lions in the sector are all the creation of government.

Government must therefore not cowardly shy away from taking them on and defeating them as a prerequisite to withdrawing from the sector.  We also recognize that government will always have a presence in the sector as an umpire or a regulator but not in the dictation of prices.

Government must therefore implement these measures given the highlighted benefits.



The following must guide the action of the federal government if we are serious as a nation to bury this “subsidy monster” permanently.

These are Revamped regulation to back subsidy removal

Government should pass a robust law to underpin deregulation such that some of the issues discussed above that need to be made permanent are underlined by the law of the land

The use of import licenses is outlawed; competition in the downstream sector is entrenched; and PPPRA is given teeth as an effective regulator and ombudsman.

Government should immediately embark on the programme to raise the capacity utilization of our refineries to international levels. This is why we would like to see the immediate publication of the TAM agreement signed between the government and the foreign contractors said to have constructed the refineries, who are now supposed to handle their repairs. We want to see the timelines and deliverables, as this is key to removing the present burden of over – priced petroleum products from the back of the already impoverished Nigerian masses.

We do not understand the logic behind the phased TAM programme by the NNPC for the existing refineries in an emergency situation like ours. It shows that as far as government is concerned, the current distorted petroleum products market that has given rise to the last protests nation-wide and the lives that were lost does not ring bell in their conscience.

Was it the same organisation that constructed all the existing refineries? Why not take on the TAM of the four refineries simultaneously to bring all of them on stream this year rather than having to wait till 2014 as being pursued by the NNPC? Does it not show that somebody or a group is interested in seeing the present fraud in the sector continue?

As a follow up to the above, we call for the immediate commencement of work on the three Greenfield refineries proposed by the government in order to expand existing capacities making it possible for us to lay to rest finally the monster called “fuel subsidy”.

Government should, as a matter of urgency, ensure that a robust Petroleum Industry Bill (PIB) that will solve the problems of both the downstream and the upstream sectors of the petroleum industry is passed into law, thereby optimizing the benefit to the people of the oil and gas sector which is a finite resource. We therefore welcome the Committee that has been set up to actualize this objective and urge that its membership be enlarged to include more Labour representatives so that its various components would be thoroughly examined and brought in line with current and future realities.

In any event, it is imperative that Government should make it clear to the people what the funds generated from subsidy withdrawal will be spent on. There is no doubt that our decaying infrastructure can do with part of the money.  Without transparency regarding the use, the funds could easily disappear into the pocket of political fat cats! This is why we believe that a further restructuring of the Belgore Committee to make it more inclusive and efficient has become highly imperative.

Moreover, the urgent need for an immediate audit of the Downstream sector of the Petroleum Industry becomes imperative. It is important that we know what is the actual quantity of PMS consumed daily, the total subsidy on it, those who received the said subsidy, who paid them, if N240b was budgeted for subsidy this current term, how did it become N1.3tr and where did the extra funds come from and who appropriated them?

It has also become imperative that government immediately constitutes and inaugurates the board of the National Council on Public Procurement in line with the Public procurement Act 2007. The refusal of the federal government to do this 5 years after its enactment calls into question the seriousness of the government in pursuing transparency and due process in all matters covered by the Act which includes such transactions as involved in the subsidy management. It is our position that doing this would immediately inject transparency in the sector and ensure that Nigerians and Nigeria are no longer made to carry burdens of corruption and failure of government to govern.

Palliative measures

It is only after the above are carried out that the actual level of subsidy (if any) can be established. The subsidy level needs to be known before the related palliatives are discussed.

Has the government done what it ought to do before taking the action of January 1st 2012? The answer is an emphatic NO.

Deregulation does not make economic sense when driven by Petroleum Products import.

Paper 71: Democracy vs Pseudo Democracy

NDi issues Position Paper 71 on Democracy and Pseudo-Democracy

Nigeria and other African nations stand the best chance at growth and development if they overcome the temptation to default to pseudo-democracy as de-facto national norms.

The NDi defines a pseudo-democracy as a system of government in place in any nation that outwardly (or on paper) claims to be a democracy while in practice grants only partial or no real empowerment to the citizens to determine their leadership through fair and competitive means in an equal opportunity environment thereby inhibiting spontaneity and stifling leadership turnover. Such a nation is a pseudo-democratic nation.

A major characteristic of a pseudo-democracy is the capacity of a few to choreograph political outcomes.

“Pseudo-Democratic: describes a political system which calls itself democratic, but offers no real choice for the citizens. This lack of choice can come from limited amount of diverse parties eligible for a vote, cemented power structures which are not really affected by any vote, no availability of a voting option “none of the above” for voters who favour change to the current political landscape, no direct democratic means, et cetera …” – Online Nation.

NDi 6 Factors
The NDi lists the following as key ingredients of pseudo democracies:
1. Ownership of political parties by ‘powerful’ interests, individuals, syndicates and or cabals.
2. Determination of party leadership by a few powerful or privileged people rather than recourse to the ordinary folks.
3. Determination of party flag-bearers in public elections by a few powerful or privileged persons rather than recourse to the ordinary folks.
4. Preference for consensus by privileged party leaders rather than subject aspirants to an equal opportunity free and fair political contests.
5. Mobilization of security personnel and electoral officers to provide tacit support for anointed candidates during elections.
6. Concentration of means of accessing economic wealth in the hands of a privileged few.

Once one or more of the above listed factors are actively in place (as the norm and not as an exception), the outcome of such ‘democracies’ becomes predictable and violent while it is not uncommon for it to be met with apathy by the citizens. Pseudo democracies are also often characterized by the presence of weak institutions even though the presence of ‘strong men’ or ‘powerful controllers’ are never in short supplies. These strong men rely on their unencumbered capacity to determine ownership of political structures and parties as well as their ability to decide the outcome of elections for survival. Sometimes, some of them might exhibit a tendency that suggests magnanimity towards the populace, but this is often a camouflage and a cover for the usurpation of the right of the people to determine their political destinies. Genuine democracies do not require the magnanimity of individuals to the citizens, rather it is the individual seeking leadership position that is at the mercy of the citizens thereby forcing those in leadership to defer to the citizens rather than deferring to a few powerful men.

Against the reality of the fact that political power determines access to economic empowerment and well-being in most developing countries, the scenario of pseudo democracies would ultimately concentrate means of accessing economic wealth in the hands of a privileged or favoured few to the detriment of the majority.

NDi affirms that genuine democracy offers the best chance for the development of Africa and that true democracy must have justice and equity as core values.

VISIT Maximiliano Herrera’s Human Rights Site for a list of countries with Electoral Democracies and Pseudo-Democracies and spot the position or status of your country.

This paper can be cited as shown below:
NDi (2012), Paper 71: Democracy vs Pseudo Democracy, available at
The shortlink to this paper is