Nigerians reacted angrily on Tuesday and to the sudden and unexpected hike in the retail price of premium motor spirit (PMS), popularly called petrol, by about 14.3 percent to an average of N617 in Abuja and N568 per litre in Lagos.
It is the second time in one and a half months that petrol price has been raised since the coming to office of the Tinubu administration.
On June 1, the Nigerian National Petroleum Company Limited (NNPCL) raised the petrol price by almost 200 percent, from an average of N195 per litre to about N540 per litre.
Just when Nigerians were trying to grapple with the reality of the escalating inflation and rising cost of goods and services, another hike was announced to worsen the economic conditions of the people.
The organised Labour, the Nigeria Labour Congress (NLC) and civil society groups have condemned the hike, describing it as insensitive and callous on the part of the government.
The President of the NLC, Joe Ajaero, said if the Federal Government does not intervene in the deplorable situation, the organized labour may be compelled to pull out of further negotiation with the committee on palliatives set up by the government to find ways to provide succour to the people after the removal of subsidy.
In his reaction, the Executive Director, Civil Society Legislative Advocacy Centre (CISLAC), Auwal Ibrahim Musa (Rafsanjani) said the latest price increase was an indication that Nigerians still remained the ultimate burden bearers of the government’s failure to take effective preliminary, decisive and demonstrable actions towards addressing the challenges of the oil and gas sector.
For Ibrahim, the citizens have been taken for a ride and lied to at every step of the way by various beneficiaries and stakeholders in the value chain.
He quoted the Group Chief Executive Officer of NNPCL, Mele Kyari, who on June 1, 2023, in response to the rising prices of petrol said the competition among major players in the oil sector would force down the price of the commodity.
Although the Independent Petroleum Marketers Association of Nigeria (IPMAN) a fortnight ago denied speculations on plans to increase the petrol pump price to N700 per litre nationwide, the latest increase has been attributed to an increase in both crude oil prices in the international market and the exchange rate of the Dollar to Naira.
Ibrahim questioned why there are no corresponding adjustments in prices when these factors go in the opposite direction.
Out of over 56 companies said to have applied for import licenses to import petrol, the Nigerian Midstream and Downstream Pricing Regulatory Agency (NMDPRA) said only 10 have so far made a commitment to import, with only three already importing petrol into the country.
Demanding for the underlying drivers of the low investor response in the sector, the CISLAC Chief said creating the environment to attract new players should drive competition and force down the price of petrol.
A review of the daily petrol consumption figures showed that the figure has fluctuated from 62 million litres in January and February this year; 71.4 million litres in March; 67.7 million litres in April; 66.6 million litre in May; 49. 5 million litres in June, to 46.3 million litres today.
While the 35 percent reduction in the consumption volumes suggests a reduction in demand for petrol by consumers, Ibrahim said this does not suggest a reduction in the level of dependence on the commodity.
“Fewer people can afford the petrol to meet their transportation, home-powering, and other needs, and small and medium-sized enterprises (SMEs) are facing difficulties in accessing affordable power. This has huge implications for businesses which rely on refined crude oil products like diesel and petrol, respectively,” he said.
Petrol and diesel prices, he pointed out, negatively and significantly affect manufacturing output in Nigeria, adding that there were at least, 39.6 million micro, small and medium enterprises (MSMEs) operating in Nigeria as of December 2020, accounting for 96.7 percent of businesses, 87.9 percent of employment, and 49.7 percent of national GDP.
Totaling about 17.4 million enterprises, he said the MSMEs account for about 50 percent of industrial jobs and nearly 90 percent of activities in the manufacturing sector, in terms of number of enterprises.
The trade deficit of $20 million recorded in November 2022 from the low crude oil export receipts, he noted, signaled the urgency to jettison petrol subsidy, develop local production capacity, and end fuel import dependency for a favourable balance of trade.
“While it is true that no nation has control over the price of crude oil, several measures can be put in place to mitigate the effect of oil price volatility on the country’s domestic economic productivity. The current underutilization of Nigeria’s refineries impedes the country’s ability to meet local demand and its economic potential,” he said.
Nigerians, he pointed out, are yet to receive firm commitments, actions, and time-lines on the delivery of the four moribund refineries to optimal operations after repairs, while the private and modular refineries have a refining capacity to strengthen the nation’s refining sector, eradicate dependency on imported oil products and lead to improved crude export earnings.
“The government is clearly insensitive to the plight of the growing number of Nigerians slipping into poverty daily as a result of its harsh policy directions. It has so far demonstrated a lack of interest in people-centered programmes that could help reduce poverty, economic inequality, and economic suffering.
“This government is inconsistent in the application of its “austerity measures” as it is pursuing outrageous, unsustainable, unjustifiable, and reckless spending at the expense of the welfare of its citizenry.
“Nigerians do not know the economic blueprint of this government and this is the repercussion of the absence of political accountability under President Bola Tinubu right from his campaigns when he refused to participate in the political debates to enable the citizens to track his commitments towards socio-economic and political reforms that can reduce corruption, poverty, unemployment and improved well-being of Nigerians.
“The government should not take for granted, the patience of poor Nigerians who reluctantly bear the dire consequences of the over 300% fuel price increase due to the subsidy removal, as part of the sacrifice awaiting when government would have settled to come up with ameliorative measures for the citizens,” Ibrahim said.
On its part, the Nigerian Union of Journalists (NUJ) also took a swipe at the government over the hike and called for immediate steps to halt the drift to anarchy.
In a statement on Tuesday, the union said it was alarmed at the announcement of the new price of petrol, saying the development has already triggered astronomical increases in transportation costs, with prices of food items soaring almost beyond the reach of the average citizen.
The National Secretary of the Union, Shuaibu Leman, who signed the statement said even users of generators to power their homes were already groaning uncontrollably under the prevailing situation.
Leman said while the union applauded the decision of the government to remove the subsidy on fuel, he said members were cautioning against a hasty implementation of the policy without putting the necessary mitigating measures in place to cushion the excruciating effects on the people.
The NUJ expressed sadness that today most workers hardly go to work or other places of business without much stress as a result of the sudden surge in petrol prices.
“We believe the sudden decision is an overkill. We urge the situation should be reversed immediately while adequate measures are considered and put in place to lessen the effects on ordinary Nigerians,” the NUJ said.
