N145 petrol per litre: Signs of looming hike, appropriate pricing question

*A car being fueled at a  filling station.

*A car being fueled at a filling station.

12 September 2016, Abuja — Nigeria seems to be walking a familiar path on petrol price, following the call by former Group Managing Directors (GMD) of the Nigerian National Petroleum Corporation, NNPC, for an increase in the price of the commodity.

Though the Federal Government, the Petroleum Products Pricing Regulatory Agency, PPPRA, NNPC and oil marketers have come out to deny any plan to increase the price, skepticism remains, as this was the same way the FG vowed, severally, that the price of petrol, otherwise known as Premium Motor Spirit (PMS), would not be hiked, until the increase was effected in May.

Ahead of the incident of May, government utilized a perfect excuse when it blamed the hike on the unending petrol scarcity which almost crippled the country for about one year and the scarcity of foreign exchange. Today, the excuse, though tenable, appears to be the declining value of the naira against major international currencies, especially the dollar.

To test the ground, the government appears to be using the former GMDs of the NNPC. It is interesting to note that at the meeting where the call for the hike was made, the incumbent GMD, Maikanti Baru, was present, as well as a representative of the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu.

Today, the PPPRA no longer releases petroleum products pricing templates, irrespective of the fact that the sector has not been totally deregulated. The development has put Nigerians in the dark as to the actual price of PMS, and this, according to some oil marketers, was a sign that a hike in the price was in the offing. Prior to the last increment, the PPPRA had disclosed that the pricing templates would be updated on a quarterly basis, but it failed to update the templates for the third quarter.

The PPPRA, in refusing to update the pricing template, is presently creating a semblance of a deregulated market, whereas Nigerians are told that the market is partially deregulated or liberalised. Price cap Making the call for the price hike, the former NNPC GMDs claimed that the PMS price cap of N145 per litre is not congruent with the liberalization policy, especially with the foreign exchange rate and other price determining components such as crude cost, Nigerian Ports Authority (NPA) charges, among others, remaining uncapped. On the surface, the claim by the former NNPC chief helmsmen appeared true, but the fact remains that the Federal Government is not sincere about its pricing policy, as evident in the PPPRA’s refusal to update and publicise the template. Matters concerning the actual fuel price are shrouded in utmost secrecy unlike what obtains in the past, where the templates were updated almost on daily basis.

The call for the removal of the N145 price cap was started by some major and independent oil marketers, claiming difficulties in assessing foreign exchange, as well as the declining value of the naira. The Federal Government had, at different for a, disclosed that the country had saved over N1 trillion from the discontinuation of subsidy. What this means is that if petrol price is not hiked, the country might end up spending such amount on subsidy in the next one year.

Devil’s alternative
Therefore, Nigeria is faced with two unpleasant choices: effect a hike in petrol price and throw the people into more suffering; or, return subsidy and plunge the economy into more woes. Meanwhile, Executive Director, Centre for Social Justice, CSJ, Dr. Eze Onyekpere, disclosed that for the Federal Government to be considering increasing the price of petrol and other fuel products at this time of grave economic hardship and distress shows a total disconnect with the plight of Nigerians. Onyekpere argued that, for now, such a policy should be suspended and no rational mind should be seen or heard to be considering it. He said, “It is absurd and makes no sense. Even though the federal government has denied the plan, the unholy gathering of those former petroleum industry captains who suggested this should beat a retreat and not attempt to cause further economic dislocation. The kite they attempted to fly has refused to be up in the sky. “We should rather be thinking of how to reduce the price of energy which has played a key role in ramping up the inflationary spiral of recent months. The reason for this suggestion is clear — the foreign exchange regime that has seen Nigeria take a bashing and our failure to refine petroleum at home.

“Evidently, there is no official plan to change the trajectory of the story beyond the private sector led Dangote refinery which preceded this administration.” Also, Executive Director, Africa Network for Environment and Economic Justice (ANEEJ), warned that care should be taken in managing government policy which could attract a negative reaction from the public.

According to him, the issue of petrol price is something we must be careful with, particularly during the current economic recession, so that they don’t unnecessarily create a crisis which will damage the reputation of President Muhammadu Buhari and his plans for the people. He maintained that irrespective of the fact that the present fiscal outlook does not support the current fuel price, the government should not be tempted to hike the price, adding that it should instead consider the effect on the people and look for a different option that will provide long-term benefit for the country. He said, “Looking into their proposal at a glance, you can see the conflict inherent in it. For example, they are suggesting that the NNPC should increase petrol price based on market approach and also at the same time asking NNPC to retain NAPIMS. How do you reconcile using a market approach in the fuel price and then at the same time encouraging state control of the institutions that will drive efficiency in the oil sector?”

Labour slams suggestion
The organised labour also warned against a new increase in the pump price of petrol, saying it would amount to madness to do so. Nigeria Labour Congress, NLC, and the Trade Union of Nigeria, TUC, insisted that Nigerians would not accept any policy that would compound the hardship they had been passing through.

General Secretary of the Nigeria Labour Congress, NLC, Mr. Peter Ozo-Eson, in a statement, warned that any attempt to raise the price of fuel would be a bad policy decision, considering the fact that Nigerians are already bearing too much hardship. According to him, the NLC was opposed to the last fuel price hike and still believed the hike was wrong.

Ozo-Eson said, “The call for the price hike is not something that is new. We have said before that this is what would happen. That is what is happening. Once you decide that import regime is what you are going to use and you claim to be deregulating, you are going to find the demand for foreign exchange to bring in the product will weigh heavily on the Naira. “Therefore, the naira will continue to lose value and when that happens, you will come back to say the price is not right. That is what is happening. We said it when we were telling Nigerians that it was a wrong policy that that, they were pursuing.”

In its own reaction, TUC, in a statement by its President and Acting Secretary General, Bobboi Kaigama and Simeso Amachree respectively, said, “In case the management of the NNPC has forgotten, the economy is in crisis and life has become very difficult for the common man who now can hardly afford two square meals per day.

“The present minimum wage can no longer purchase a bag of rice. Businesses are shutting down leading to millions of job losses, which of course have accentuated increased cases of crime and other vices. If all the members of the NNPC team can offer as recipe to contain this scourge of economic downturn is to hike the price of petroleum products, then they are not fit to manage the sector and should throw in the towel. “If the country had other sources of forex or produces most of what it imports, the economy would not be what it is now. What stops the government from building more refineries and diversifying the economy? The federal government should maintain some stability of forex, taking into cognisance the fact that Nigeria is an import-dependent country.”

Nigerians speak
Many other Nigerians also joined the labour unions to condemn the suggestion by the former NNPC GMDs for a hike in the price of petrol. Mr. Ademola Alli, a civil servant in Abuja warned against the hike, stating that increasing the price of petrol is not the best option for the country, because of the current rate of inflation.

He, however, stated: “If the government said a lot of money have been saved from the removal of subsidy, in this present economic situation we are not seeing the effect of that money. The economy is faced with many challenges. For now, no Nigerian will want an increase in fuel price. We should remain with the current price which is N145 even if it can go lower it is better for us. “There is an international price for oil but we also produce oil in Nigeria, so there should be a local price for us. I am vehemently saying no to increase in fuel price, no normal Nigerian will want an increase or support the hike in price.”

To Mrs. Ganiyat Folami, going back to subsidy is not the solution. “We heard that the government have saved about N1 trillion. Has the money had any impact on the inflation we are facing now? No. Then they said the price should be hiked. Why should it be hiked and for who? Is it for Nigerians or for marketers that import fuel?”, she said “Hiking fuel price is not the solution too.

How many filling stations that are selling fuel now that you can see queue? N145 as the current price is still a problem to the nation. People are feeling its negative impact. It is only mega station NNPC that you can see queue all because they sell at a reduced rate which is N141 per litre. Most times if you see a queue at NNPC mega station, if you have an emergency, if you are in a hurry you will rather go to a station that sells at N145 than N141.

“They should think otherwise because neither the hike in petrol price or return to subsidy is the solution. We are all suffering it. Look at me, as a woman, I am planning to travel for Sallah to meet my husband, I have to go and queue very early at the NNPC station so that I can buy fuel at reduced price. So, the government should think out of the box and resolve this issue and not concur to hiking the price or return to subsidy.”

A motorist, who gave his name as Mr. Samuel Samuel, claimed hiking the price of the commodity would further worsen the country’s economic situation. He said, “Fuel issue is the least of our problems. Has the removal of subsidy helped our economy in any way? The Government is the one that has the hammer and they know where to hit to get the solution. To me, hiking petrol price will worsen the economy”.

Another motorist, who gave his name as Dr. Lekan said, “The last time I checked, the Minister of Information has clearly stated that the government will never increase petrol price. That does not mean that they may not eventually do it but that is the disposition we still stand on now.

“The call by the former NNPC GMDs was just a mere advice and it is not binding on the government yet. I believe it would not be the best interest of the masses, who are already going through a lot of serious crises.”

To Oladele Abdullah, “The Federal Government should not increase petrol price because, life is hard enough for the common Nigerian as it is with the soaring foreign exchange, which is affecting everything and the uncontrolled inflation.

“Increasing the price of petrol would have multiplier effect, increasing everything from the prices of food to the price of transportation. On the issue of subsidy, I would like to ask if where the money which they saved from not paying subsidy is, as the federal government cannot pay their staffs very well, while the state governments are telling their staffs to go back to the farm,” he said Temidayo Oluwaseun, also a motorist, said,

“Government should not hike petrol price as it would make the lives of the average Nigerian more difficult as the prices of things would skyrocket, starting from transportation to the price of staple foods.

“However, looking at the issue from the angle of government, if increasing the price of petrol would enable them to save more money, if they cannot afford to pay it anymore, then they should hike the price. But they should also take note that if they eventually decide to increase the price the masses, in general, would not the happy as it would cause more suffering for citizens.”

Gayet Oluwaseun, a resident in Lagos, said, “The money that was saved from not paying subsidy, what was it used for? Because in my own opinion, it is not like it was used for something important, as it is somebody that will still later embezzle the money while Nigerians will be suffering the consequences. Let the price of petrol come down and government should stop letting the masses suffer for their decisions.”

*Michael Eboh, Chiamaka Ajeamo, Susan Onuorji, Rebecca Amos & Abolade Olawale – Vaznguard

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