Democratic Socialist Movement

For Struggle, Solidarity and Socialism in Nigeria

By - DSM



Need for Public Ownership of Oil Industry

By H.T. Soweto

For weeks in April and May 2015, a drought of fuel has hit Nigeria, ironically Africa’s top economy and largest crude oil producer. Queues have returned to petrol stations. Transport costs are rising. Where fuel is available, it goes for as much as N150 per litre and double of this price on the black market. This scarcity on top of a 50% crash of crude oil price on the world market and the consequential financial crisis it has set off illustrates just how unsustainable is Nigeria’s lack of control of its oil assets much of which is in the hands of foreign and local multinational oil companies and marketers.

The current scarcity is not caused by the global trend in the crude oil market. Starting from last year, crude oil price crashed internationally, negatively impacting on the economies of key oil exporting countries. Contrariwise, this scarcity is caused by the refusal of oil marketers, who import refined fuel products into the country for domestic use, to continue to do so until the Federal Government pays what it purportedly owes them in subsidy payments. Subsidy, the difference between the landing price of fuel and the fixed domestic price, is paid for by the State to guarantee cheaper price of imported petrol.


In essence, what we have is an artificial scarcity, in other words a strike by the oil cartel (a group of oil marketing and storage companies) that for years, and in connivance with politicians, have been ripping off the country billions of naira in opaque subsidy payments. A probe launched into the subsidy payments in 2012 in response to the demands of the mass movement and strike early in January that year revealed much rip-off and embezzlement to the tune of $1.1billion. But except for a few arrests and circus trials, it has been business as usual for oil marketers, government officials and politicians.

Despite being an oil-producing Nation, Nigeria relies on imports for over 70% of domestic fuel needs. This is primarily because the country’s few refineries are not functioning at optimal capacity. Over 5 decades after oil was discovered in commercial quantity, Nigeria can only boast of four refineries with a combined oil distillation capacity of 445, 000 bbl/d. But even with this amount if compared to total local petroleum consumption in 2014 of 305, 000 bbl/d, it should mean that Nigeria does not have to import fuel at all. However in 2013, the “combined refinery utilization rate was 22%” (US Energy Information Administration). This significant shortfall has to be taken care of by importation meaning that much of what the country gains in crude oil sale and foreign exchange earnings in turn lost to fuel imports and subsidy payments.

Nothing better illustrates this capitalist absurdity than the current situation. According to the Major Oil Marketers Association of Nigeria (MOMAN) for instance, the Federal Government owes importers and storage companies the whopping sum of N200 billion ($1billion) in subsidy payments (ThisDay newspaper, 14 May 2015). This is after the initial payment of N154 billion in April. A large part of the balance of N200 billion – about N156 billion according to the marketers – is for forex differentials claimed. What accounts for this huge forex differential is the devaluation of the Naira as the government could not further stem its free-fall against the dollar with a dwindling foreign reserve. From N168 per dollar last November, a dollar now exchanges for N199.90 at Central Bank of Nigeria (CBN) approved interbank channels. But the free-fall of the Naira continues. This means that even if the Federal Government is able to pay the marketers their outrageous claims, the next few months of fuel imports will see an accrual of similar monstrous claims.

In the long run and at some point, this would become unsustainable as the debts pile up. Already, alarm bells have been sounded by the former Finance Minister that the country has exhausted half of this year’s borrowing allowance. Cash-strapped, 23 State governments are owing workers salaries and arrears of pensions. Tragically, the capitalist ruling elite who have a “take-the-money-and-run attitude” do not see it in their interest to build the capacity of the country to refine its own fuel (a capital-intensive project) since they already benefit enormously from the current state of affairs which ensures huge profit for oil marketers with little capital investment.


The Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) need to intervene decisively in the current situation beginning with a mobilization for a one-day mass action especially to register the displeasure of the working masses to the fuel shortages. The labour movement must insist that a bunch of oil marketers cannot hold society to ransom while still making enormous profit.

For instance, some filling stations still sell fuel when it is available, more than the official price of N87. Also fuel is being hoarded in the underground tanks of petrol stations, storage companies and depots whose operators prefer to sell to black marketers instead of the people. In a period of marketers sabotage and scarcity, what the labour movement must do as part of the mass resistance is to organize enforcement committees at community levels made up of workers, civil society activists and community youths to enforce price control at filling stations and also ensure that the products are discharged and not hoarded. Petrol stations, depots and storage companies discovered to be hoarding fuel should be closed down immediately by the enforcement committees with the backing of the people. The labour movement must demand that the N156billion exchange rate differential being demanded by the major oil marketers is immoral and must not be paid. Workers, artisans, peasants and self-employed people have also had their income devalued as a result of the depreciation of the naira and no one is paying them for the losses! But the marketers want to make all the profits without bearing any risks or losses.

Meanwhile, as the fuel subsidy probes revealed, oil marketers and other middlemen and shylocks in the oil industry have been making tremendous profits including on fraudulent claims on shipments of petroleum products not supplied. In one instance, at least $1.1 billion dollars were found to have been wrongfully claimed! Ordinary workers in the industry should not suffer, but those who profited during the boom should be the ones who tighten their belts. In addition, the labour movement should demand a public probe by a committee, made up of elected representatives of trade unions, workers, experts, social movements and civil society, into the subsidy payments as well as the activities of the NNPC and its subsidiaries. Other demands which the mass action should raise is the urgent need for the upgrading of the capacities of the refineries and building more as well as the taking into public ownership of the oil industry under democratic control and management. The mass action must also raise demands on other critical social issues like non-payment of salaries in most states and the power outages.


Many hope that the new government will meet the aspirations of the people, but to do this satisfactorily require measures that would challenge profit-interest and crony capitalism. But to this effectively would be tantamount to asking for the moon from a pro-capitalist government.

For instance the enormous corruption and sharp practices unearthed in the NNPC is actually a function of the central role oil plays in the sustenance and maintenance of Nigeria’s neo-colonial capitalist ruling class. For reason of arriving late on the stage of history, the capitalist ruling class is managing a weak capitalism which is caught up in a relation of dependence on the advanced capitalist countries. This relation of dependence finds its manifestation in the position of Nigeria as a raw material-exporting (crude oil, cocoa, rubber, etc.) nation while it in turns imports finished goods and services, skills, technology, fashion, entertainment etc. from the industrialized capitalist world. This is why crude oil export accounts for over 70% of Nigeria’s revenue.

The relation of dependence foisted by imperialism in conjunction with the rapacious corruption of the capitalist ruling elite also accounts for Nigeria’s chronic underdevelopment despite the abundance of human and material resources needed to develop society. According to Oil and Gas Journal (OGJ), Nigeria has the second largest amount of proven crude oil reserve in Africa after Libya estimated as of January 2015 at 37 billion barrels. Yet the same country is unable to guarantee very simple basic needs of its people. According to the US Energy Information Administration, Nigeria has one of the lowest rates of net electricity generation per capita in the world with an approximately 100 million people, out of a population of 170 million, without access to electricity.

Therefore while curbing corruption, reforming the NNPC and the oil sector, diversifying the economy and developing the capacity to refine fuel for our own domestic consumption are all significant reforms that would all constitute great advances over the sordid past yet these would not fundamentally make Nigeria’s economy buoyant enough to be able to satisfy the needs of its long-suffering working and poor people if international oil companies and profit-interest continue to call the shots in the oil sector and the nation continues to depend entirely on import for its demands for finished goods, technology etc. Therefore, the sine qua non for placing Nigeria on the highroad of development is to break from the relation of dependence by doing away with the imperialist domination of the economy as well as capitalist relation and introducing a socialist economic plan to begin to reorganize society to meet the interests of the working and poor majority. This is where the argument for public ownership of the oil industry under democratic control and management retains its validity today. Despite any limited measures it takes, this necessary fundamental change cannot be achieved by the incoming government of Buhari as it supports the capitalist system.


It is the lack of public ownership, genuine control and management of the oil industry that makes it possible for a group of marketers to hold to ransom the entire country by refusing to bring fuel products into the country. This is also why the industry is unaccountable to the people. Also as a result of the dominance of profit-interest in the oil sector and the role of imperialism, successive capitalist governments have not been able to build the courage to revamp Nigeria’s refineries so that fuel for domestic use can be refined here in the country because this in essence would lead to the ending of the profit of the local and international oil cartels and marketers. Only a government that is not in the pocket of oil cartels and marketers can take this step. Unfortunately successive capitalist governments have often been elected with campaign funds and donations from the oil industry which goes to any length to make sure its interests are well protected. Regardless of Buhari’s self-righteousness, the reality is that his government was similarly elected with a campaign fund running into billions of naira donated not by ordinary Nigerians but many of the crooks (or their fronts) now holding the Nation to ransom.

But if it was a Socialist government that came into power on May 29, 2015, the first step it would take to arrest the drift of Nigeria’s economy over the precipice would be to take into public ownership the oil industry under the democratic control and management of the working people as well as the banks, finance, big industries, corporations and a state monopoly of foreign trade. The local and international oil companies would be nationalized and their assets in Nigeria taken over by the state, with compensation paid on the basis of proven need, to prevent capital flight and for use in the service of the people. The business of oil marketers and middlemen importing fuel products would be immediately halted and those who have defrauded the nation will together with their accomplices be investigated and prosecuted and their assets seized. To guarantee availability of fuel products in the meantime, a socialist government would enter into agreement with foreign refineries to import petroleum products. However this would just be a temporary measure of a few months as the State would hurry to ensure self-sufficiency in the refining of crude oil and halt the wasteful practice of subsidy payment by immediately investing in building new refineries and revitalizing the four existing ones. To replace the NNPC, the new government would establish a new body run collectively by a board whose members who must be individuals with working experience in different fields of the oil industry however not appointed as in the past, but elected by workers, consumers and the oil-producing communities. Instead of private interest, the state shall be responsible for crude exploration, production, lifting and sale.

These key steps if now linked on an economy-wide basis to public ownership of banks, finance, big industries, corporations and state monopoly of foreign trade can then open up the possibility of introducing a socialist plan of the economy to permit diversification, industrialization, creation of living wage jobs with union rights, improvement in electricity generation through investment in eco-friendly energy sources and provision of free education and healthcare, a massive public works to build safe and decent homes, building of roads and transportation infrastructures and opening up the rural areas through investment in agriculture and allied industries etc.


We strongly defend the potency of public ownership under democratic control and management as an economic and political measure to push Nigeria back from the brink for the simple reason that it is the only way to break the back of capitalism whose profit-interest is fundamentally what has held back Nigeria’s development.

Meanwhile by public ownership, we do not mean either the form of nationalization seen in Nigeria and other countries which allowed local elites to loot public assets or Stalinist authoritarian, bureaucratic rule. Equally by Socialism we do not mean what occurred in the former Soviet Union when, from the mid-1920s, a developing elite took control, blocked democratic control and management by the people themselves so that the privileged layer could maintain their rule. The former Soviet Union at the time of the revolution in 1917 was a very undeveloped and poor country, far behind the countries of Western Europe then, with pre-capitalist modes of production existing side-by-side and sometimes predominating over the capitalist mode of production. However, due to the nationalization of the economy, within a period of a generation, the former Soviet Union was able to develop it industry and economy at a lightening rate to become second largest economy after the United States.

But this development did not continue, increasingly the authoritarian rule stifled the economy and society. A far-sighted revolutionary Leon Trotsky who, together with V.I Lenin, was one of the original leaders of the 1917 Russian socialist revolution argued from the 1930s that, despite its growth, the Soviet Union would eventually collapse unless a political revolution replaced the rule of the Stalinist bureaucracy with a genuine workers’ democracy. In the book “Revolution Betrayed”, Trotsky explained that a nationalized planned economy needs workers democracy as the human body needs oxygen. Unfortunately, exactly as Trotsky had warned, the former Soviet Union eventually collapsed out of internal contradictions in 1990 and capitalism was restored with brutal consequences for the working and toiling masses of that region. Against widespread distortion, it is necessary to stress here that what failed in the former Soviet Union was not Socialism, but a deformed caricature of a workers’ state. The authoritarian and bureaucratic regime of Stalin, which developed because of the extreme isolation of Russia and failure of world revolution in the advanced capitalist countries which could have come to the aid of the young workers’ state, had nothing to do with Socialism as described and envisioned by Marx, Engels, Lenin and Trotsky.

Therefore, if public ownership of the oil industry and economy is not to end up like the case of the former Soviet Union or, to recall experience closer home, like the past State-owned corporations in Nigeria like NEPA, NITEL, Water Corporations etc. that eventually became ineffective and crony institutions as a result of the way they were run bureaucratically, genuine control and management by the working people must be established. This can only be possible when workers and the mass of the people are allowed to have a say in how the economy and political system is run. This means no appointments; all principal officers of a public company must be elected by workers of that company and the wider labour movement, and also be subject to immediate recall when found wanting. This is the best way to ensure the people are involved in how their affairs are run.

But to achieve all of the above will require the working class building its own independent voice and political party. While Buhari may take steps against some vested interests in an attempt to clean up the oil industry, the reality is that there is a limit to how far he can go if he continues, as unfortunately he and many around him do, to believe that change is possible within the system of capitalism. Only the working masses organizing independently and rising in their millions can put a decisive end to the pillage of our collective patrimony through ending capitalism and putting in place a workers’ government armed with democratic socialist policies.

  • (11) For a planned economy, run on socialist policies and programmes, to not only ensure that Nigeria’s vast economy is made to work for the people instead of the profit of a few but also to ensure that the economy is diversified away from oil to more efficient but cleaner, renewable and eco-friendly sources of energy.