There is a saying I came across recently that captures the American view about their deficit:

I favor balancing the budget by raising everyone's taxes but mine. I also want a magic pony.

This wish fulfillment desire also afflicts Nigerians as they talk about all the things that the government should be doing. The desire for magic solutions means that no real solutions will be reached, which means that nothing will happen, which means that there will be more incentive for corruption. Rinse and repeat ad nauseum.

There are two main sectors in which this magic pony thinking affects us deeply: Downstream oil and gas and power.

We want investments in the petroleum downstream infrastructure but we are not willing to pay fuel prices that would enable investment to be made in that sector.

We want gas to power our power plants but we are not willing to pay electricity prices that will allow the power plants to pay commercial prices for the gas and make investments in gas collection and distribution economical.

The standard solution to the magic pony problem is that the government should do it. The Nigerian government has taken on the magic pony with pretty predictable results.

Let's take power. The government has built all these nice and fancy power plants that don't work because there is no gas. There is no gas because there is no incentive to spend billions of dollars on gas infrastructure to supply gas to a customer that will pay 10c for product that trades on the world market for 25 to 35 times that. So the government is trying to blackmail the oil companies into building it, but the government will have to bring a lot more to the table than moral suasion.

Let's take downstream petroleum products. The government answer to this was to subsidise the products. This meant that those who imported the product were relying on the government to get an economic return. The government penchant for paying late meant that people were not making an economic return, and would only make minimum investments in their distribution network. This meant old, exploding trucks, practically no pipelines, and a lot of Tom, Dick and Harry distributors in the system.

Luckily magic pony thinking is leaving the downstream sector. The Federal Government has realised that they can't afford the subsidy, the state governments have realised that they too pay for the subsidy (they thought the federal government paid everything), and it is now common knowledge that subsidy only exists in the major cities and states (with the exception of Kano). There is now a panel to decide how best to implement deregulation: this implies that the Rubicon has been crossed in terms of petroleum products but it's a long way to Rome. Power on the other hand is still in Gaul.

P.S. Someone called Amanda left a comment on my blog about a bbc world blog interview thing. Since I get a lot of spam these days, I'm tempted to assume it is indeed spam but in case it isn't my email is snazzy.rites@gmail.com