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Vanguard Editorial: Defects in de-regulation

Defects in de-regulation

Editorial

Tuesday, February 23, 2010

DE-REGULATION, the public thinks, is another name for price increases without any certainty about improvements in services. While de-regulation has worked with the telecommunications industry, where the issues of power (fuel and energy for industrial, commercial and domestic uses) are concerned, the same factors that made telecommunications a burgeoning success appear to disappear.

People fear that the special interests that control the petroleum and power sectors will maintain the parts they have played for years. These are profitable ventures where the dividends are reckoned in billions of dollars.

Nigerians have gone for months with scarcity of petroleum products. Poor electricity supplies have been blamed on gas shortages. Both examples confirm supply uncertainties and they are not matters that simply de-regulation can handle.

In some ways, both issues are not limited to low capacities to meet demands, as much as the dangers that poor security and social unrests have caused. How would de-regulation stop pipeline vandalisation, or the poverty and greed that discount the high risks of the business? Would de-regulation secure the supplies for gas and improve electricity supplies?

De-regulation has its limitations and the authorities must admit them rather than the rosy pictures of better infrastructure that would result from the freeing of resources committed to subsidising domestic fuel consumption. Government should not abdicate its responsibilities to the people. Most Nigerians are not in a position to bear the extra burden of price increases.

Promises of ploughing savings from subsidies into infrastructure may not be kept. The truth is that government is already too wasteful to free any resources other than allocating them to the rising costs of maintaining thousands of political appointees whose contributions to the well being of the economy are doubtful.

Another fallacy the authorities delight in spreading is that rural dwellers would benefit from de-regulation. It is impossible for them to benefit from this policy with the structure of the Nigerian economy that concentrates on pleasing urban dwellers. While the government makes great effort to stabilise prices in the cities, where the dwellers have better economic powers, people in rural Nigeria (and in most cities outside Abuja and Lagos) have never bought petroleum products at official prices in more than 15 years! How would de-regulation change this?

The fear in rural Nigeria is that the prices would still go up, above whatever the de-regulated price is in the cities. Rural Nigeria suffers from poorer infrastructure that has virtually cut it off from the economy, doubling costs and elevating poverty. These bear vast implications even for the urban dwellers too - higher food prices, higher medical bills from mal-nutrition, higher expenditure on fuel and electricity and less personal savings.

More thoughts for rural Nigeria need to go into the planning for de-regulation if Nigeria intends to stem the poverty raving the country. There must be more to life than price of fuel.

Regions : Africa

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