A Review of the Nigerian Energy Industry

Nigeria operates fuel fraud, not subsidy – David-West

25 January 2012, Sweetcrude, Lagos –Professor Tam David West, served as Nigeria’s Petroleum Resources Minister in the Gens. Muhammadu Buhari and Ibrahim Babangida regimes in the 1980s. In this interview with CHARLES KOMOLU, he dismissed claims that there were actually subsidy on petroleum products, adding that what was existing was corruption caused by middlemen, who were brought into the process of refining and transportation of fuel in the past and present by the Federal Government. He also lamented that polices like Petroleum Equialisation Fund,PEF, lost its relevance because of the corrupt motives of major players in the oil industry. He also spoke on other petroleum sector related issues.


The Federal government had noted that the amount it spends on petroleum subsidy annually, amounts to waste since it goes into the pockets of some marketers. This is happening in a country were a decree was passed in 1975 establishing Petroleum Equalistion Fund, PEF,which sought to create uniformity in the pricing and distribution of petroleum products nationwide. Don’t you think that the question of subsidy should not have arisen with the existence of PEF?  

What is happening is intellectual laziness and physical indolence. Petroleum Equalisation Fund is about price equilibrium. Before it came into existence,all the petroleum installations were in the South. Petroleum equalisation fund is set up to make petroleum product price uniform all over the country. If you are hauling petrol from here to Kaduna, Kano or any where, you pay differential on transportation. That will be no problem at all. When I was minister, we had about N200 million in the Petroleum Equalisation Fund. And it was due to good management, because when you pay differential, you will still have money. Engr. Hartey from Warri was the Chairman. when Babangida overthrew Buhari, and all the ministries were donating to Babangida’s economic efforts, I gave Babangida N100 million from PEF. So, PEF was a good idea. And it has even compounded their problems because they are incompetent and corrupt. There is no subsidy. What they claim to be spending on subsidy is false and fraudulent. I have been saying this and I challenge Okonjo Iweala to face me in a television debate on the matter. I will prove to them with facts that there is no subsidy. You cannot remove what does not exist. They would have said that they are stopping the fraud in fuel importation, rather than claiming to remove subsidy. When they had their town hall charade and fallacy, who does the removal of the petroleum subsidy benefit? They should have established it if actually Petroleum subsidy exists. If you say that government’s claim of paying subsidy is bogus, does it mean that during your two tenures as oil minister, government was not paying for subsidy. How were the issues that gave rise to today’s subsidy managed during that period? I was appointed by Gen. Buhari and was reappointed by Babangida. I was the second Southern Petroleum Minister after Dr. M. T Akubor, who was appointed by late Murtala Mohammed. During my period as minister, there was nothing like subsidy. It is all lies. What was happening was that if there was shortfall, we had ways of making up and at that time we had only three refineries and the fourth refinery contract was signed by me. If for a particular time, all our refineries could not give us what we need or if we needed about one million litres more, we gave crude oil to companies like Shell under a policy we called Offshore Processing. The company goes ahead to refine the crude oil abroad, send us the required litres of petroleum and take their commission. We had no middle men then and we never imported within those periods. The fuel brought to us was what we sent abroad to be refined. Where things went wrong was when they started having middle men. Instead of going through a straight point, which is the shortest distance, they started involving middle men. They brought contractors like Julius Berger to be refining fuel. The middle men now started cutting corners in the refining and importation process. So what we have is corruption caused by the government and the middle men.

You mean that was where things began to go wrong?

Yes. I cannot advice on something that does not exist, because there is nothing like subsidy. I can only advice them on how to mange our oil resources in the best interest of Nigerians. My advice is simple, I did an article which was published by Vanguard on July 31, 1996. I called the article: The sabotage theory of Nigerian refineries. And what I said 16 years ago, is happening today. I raised an alarm then that they had sabotaged our refineries. I found out that they were deliberately doing it then to benefit themselves. I said that the people, who were importing fuel into the country should be named. If that was done Nigeria would have gone ablaze. The deliberate killing of the refinery, was primarily to create artificial fuel shortage at that time. It was done to justify fuel importation. My advice is simple and any serious leader is expected to adhere to it, but Jonathan is disappointing us. Why has he not come up with plans on how to fix the refineries. I can tell you that what they have in mind is to sell those refineries to private investors after some time. They should build more refineries and fix the old ones. A refinery that produces about two hundred thousand barrels a day can be built in nine months. I signed the contract of Port-Harcourt refinery in 1985. Why can it be revamped. Saying that if the refineries would be fixed after subsidy removal is rubbish. Do you have to kill the patient before buying drugs?

More refineries

In 2000, Oshiomhole led a nationwide strike on fuel price hike, and Obasanjo promised to build refineries. The same Obasanjo built two refineries during his time as military head of state, yet he couldn’t build one during his eight-year tenure as President. It was not done because of the interest of the oil cabal and other crooks. Jonathan did tell the truth when he said that our oil is the cheapest in the world at the rate of N65. Our fuel is one of the most expensive. I am writing something currently on it, and I will show the world that at N65 our petroleum products are far from being the cheapest. We cannot be compared with Ghana. It is stupid to compare Nigeria with Ghana, because when I was minster, Nigeria was supplying oil to Ghana. Ghana was owing a lot of money then that they could not pay. They also found oil recently, so there is no basis for comparison. Then to compare their pump price system with ours is stupid. And to say that there is no border smuggling is a lie. During Buhari, we had anti-border smuggling to fight this kind of menace. So, removing subsidy is rubbish, because there is no subsidy. The answer remains the removal of middlemen, fighting the corrupting in the oil sector, revamping the refineries and construction of new ones.

In this article

Join the Conversation

  • adesina waheed

    nigeria have wake up from their slumber,this government cannot fool us again.”a man who make trouble for others,is also making trouble for himself” update me in my mail