By Chibuike Nwabuko
ABUJA (PRECISE POST) – Renowned economist and political economist, Prof. Pat Utomi, has identified former refinery Managing Director James Owokalu as one of the key figures whose experience, he said, could help explain the roots of Nigeria’s long-running petroleum subsidy crisis.
Utomi, in a post on his X handle on Saturday, said he was compelled to mention names after some readers sought clarification on individuals he had referred to in his earlier commentary on the origins of the subsidy crisis.
He said his position was based on research into institutions and economic performance, which, according to him, showed that neither a return to the former subsidy regime nor a “thoughtless” removal of subsidies would increase production, reduce poverty or expand economic freedom for Nigerians.
The economist said the depth of the crisis could be traced through discussions held at the Centre for Values in Leadership (CVL), which he said he hosted about six years ago.
According to him, Owokalu, whom he described as “a great Loyolan,” was the refinery managing director who became frustrated by alleged irregularities surrounding the operations of the refineries more than two decades ago.
Utomi also referenced former Petroleum Resources Minister Don Etiebet, saying: “I would not even begin to talk to the things Don Etiebet told me.”
He, however, stressed that the problems confronting the Nigerian National Petroleum Company (NNPC) should not be attributed to every individual who served within the institution.
“Bottom line is that NNPC was badly hit by the tragedy of the commons,” Utomi said, while acknowledging the contributions of former NNPC officials such as Tony Ogbuigwe and Funso Kupolokun.
He argued that despite the efforts of some officials, Nigeria’s refineries eventually became a significant burden on the national budget.
Utomi called for a restructuring of government spending, urging authorities to “drain the swamp” and redirect savings into production clusters backed by a coherent industrial policy.
He said such an approach would create opportunities for educated Nigerian youths, reduce the number of out-of-school children and enable the country to transform its youthful population into a demographic dividend.
The economist also challenged the perception that subsidies were inherently wrong, arguing that the critical issue was what should be subsidised.
“Subsidies are not a sin. But we should subsidize production and not consumption,” he said.
Utomi warned against returning to the subsidy regime that existed before the current reforms, saying such a move could worsen corruption and further impoverish Nigerians.
“To return to subsidy ante belum would trigger greater corruption and punish the poor further,” he said.
Precise Post recalls that Utomi took to his X handle on Thursday and said:
“One of the finest explanations of where we are in this matter of petrol subsidy is rooted in Institutional economics from a 1968 article by a Marine Biologist titled The Tragedy of the Commons. In maximizing the self interest you may shortchange your own self interest in the long term, not to mention the common good. The typical response is to turn to privatization and the competition doctrine. But in development stages Industrial policy may require state intervention. But that requires creativity which we see in strategies that drove South East Asia Industrialization compared to ISI in Nigeria which produced permanent infant industries.
Subsidy, where necessary, has to stimulate production and sustainable job creation. The alternative is to return to the mess.
Those little games eventually dove tailed into huge Turn Around Maintenance (TAM) super scams. Money was set aside for importing petrol when the refineries were out of commission. It worked for a while. One minister of Petroleum came and diverted the pooled funds for other purpose in the hope they would be replenished later. They were not. And so private capital was sought. Petrol importers were soon presiding over the mother of all scams. Most of what we called subsidy were monies paid for ship that entered the harbor signed in and left with the fuel cargo only to return days later with the same cargo.
Nigeria is so far gone today that reintroducing the subsidy regime will see magnifying of the scams. Still the failure to massively investigate the scams and ensure consequences after the ‘subsidy’ was triumphally revoked, showed the revocation was more a show to play to Washington consensus than to solve the problem of massive hemorrhage of the Nigerian economy.
So fuel subsidy is back on the front burner. To understand the stakes and solution you need to understand how it started and why it became the mess it became. You may also need to understand the tragedy of the commons and what is at the roots of the Washington consensus.
Good intentions can become a mess. We built refineries with good intentions. They served us well for a season. One of the MDs was an old boy of my high school. We served in the old boys executive. He told us amazing stories of broken parts reports that came on Friday threatening production and fuel queues . Our colleague was so shell shocked by scams to sabotage the refinery he has not lived in Nigeria for 25 years. Sadly that which belongs to all can belong to none.
