Monday brief: Fuel queues and Buhari's witchcraft economics
+ Nigeria's 'trial of the century' kicks off in London
Good morning.
We are covering Nigeria’s lingering fuel queues and the federal government’s defence of the landmark $11 billion arbitration award against it in London.
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Why fuel queues will continue to linger
This past week I was in Abuja for a journalism workshop, and it was hard to miss the long queues for petrol at many filling stations; taxi drivers complained bitterly about the situation, which they said had been the same since early 2022. And petrol resellers lined major highways with their translucent kegs and pipes. Different city, similar problems.
The problem here, of course, is cost. It is now more expensive to import petrol and the Buhari administration - which has failed Nigerians in virtually all sectors of the economy - is unable to provide leadership during this difficult time.
Last Friday, the minister of state for petroleum resources, Sylva, in a statement, said the government has not approved any increase in the pump price of petrol. But what is the usefulness of N169 petrol if it is not available?
One of the characteristics of the Buhari administration has been its hubris, which makes it think it is capable of arresting the laws of economics for its narrow purposes. We’ve seen it in policies such as the border closure, the artificial propping up of the naira, and its abuse of the central bank’s ways and means. Again, the Buhari administration, rather than confronting the problem head-on, has resorted to cheap propaganda.
What is the problem? The rising cost of importing the product and delivering it to the final consumer. That means the cost must reflect the price if supply levels are to meet demand. Some marketers have said the price could reach as high as N800 if subsidies are removed. (Subsidies are expected to remain in place until June)
Knowing how the Buhari administration works, it will allow secondary market prices to continue to rise while maintaining the ‘integrity’ of his N169 (N195?) pricing for official record purposes.
It's witchcraft economics, but it's also another reason why Nigerians should take the upcoming elections seriously and elect leaders they can hold accountable.
What else is happening?
P&ID: The federal government will begin its defense of the $11 billion arbitration award against it today in London's High Court. If the High Court decides to enforce the arbitration tribunal’s decision, Nigeria would be liable to lose nearly a third of its foreign reserves - an amount equivalent to three times the nation's combined annual health and education budgets.
The deal with Process and Industrial Developments (P&ID), a British Virgin Islands-registered company, was struck in 2010, as the Nigerian government sought to end crippling energy shortages by boosting supplies of gas for power stations.
P&ID was supposed to build a gas plant in Calabar to process gas that escaped from nearby oil production sites, so it could be used in power stations, instead of being flared off.
But the gas plant was never built.
In 2012, P&ID sued Nigeria in arbitration in London, arguing the country had failed to deliver the gas for P&ID to process and asking for $6 billion in damages, the profit they expected to make. In 2017, a UK tribunal awarded $6.6 billion in damages. The award has been racking up interest and is now worth around $11 billion.
Now, Nigerian officials are arguing that the P&ID deal was corrupt from the outset.
Train incident: More than 140 passengers and crew were stranded after a train plying the Warri-Itakpe route derailed inside a Kogi forest. The Nigerian Railway Corporation said the passengers have been evacuated and has suspended services on the route until further notice.
Erratic power supply: Electricity distribution companies said customers will continue to experience a reduction in power supply for an indefinite period due to “insufficient load allocation received.”
New naira notes: Less than nine days to the deadline set by the central bank, many ATMs continue to dispense old naira notes to Nigerians.
Interest rate decision: The two-day monetary policy committee meeting of the central bank is expected to commence today. The committee determines the nation’s benchmark interest rate. After inflation slowed last month, some experts expect the committee to not raise rates. Raising the benchmark interest rate increases the cost of borrowing and encourages savings, at least in theory.
Peter Obi in Kano: A massive crowd turned up for the Labour party presidential candidate in one of the key battlegrounds for the imminent poll. “We want to bring back Kano to what Kano used to be,” Obi said. “That is what we want to do and we can only do it by pulling you out of poverty. We are not in this business to waste anybody’s time.”
Killer infection: Diphtheria, a serious bacterial infection that can lead to difficult breathing, heart rhythm problems, and even death, appears to be on the rise in Nigeria. It is easily preventable by a vaccine, but experts say Nigeria may not have the vaccines readily available.
The big count: The much anticipated national census is now expected to be conducted from March 29 to April 2, according to the National Population Commission. Nigeria’s last census was held 17 years ago.
Climate desk
Low-carbon drive: The United Kingdom has launched a climate finance accelerator in Nigeria to directly respond to the urgency and scale of the climate crisis in Nigeria. Project developers are to complete the application by February 17 and the project must be in “pre-feasibility stage and should be seeking investment of at least USD$1 million with no upper limit.”
Muhammad Abdullahi: The minister of environment believes Nigeria can access more climate finance by setting up a carbon market. Nigeria is a key supporter of the Africa Carbon Market Initiative. Meanwhile, activists have described carbon markets as a waste of time in dealing with the climate crisis.
Climate crisis: A shrinking Lake Chad, caused in part by climate change, has contributed to conflict and migration in the Lake Chad basin and the wider Sahel region, according to a report by human rights group Refugees International. The basin is shared between Cameroon, Chad, Niger, and Nigeria.
And that’s it for today. See you tomorrow.