‘Passage of PIB will cushion effects of new pump price regime’
John Chuma Nwosu, Managing Director, Jetlink Limited, an information technology player and 2013 National Productivity Order of Merit Award Winner told ROSELINE OKERE, that price increase of petrol was inevitable, but government must pass the Petroleum Industry Bill (PIB) in order to attract more investments in the sector.
The Federal government has just announced a new pump price regime for petrol. Do you think governments’ capping of petrol at N145 is good for the consumers?
For the general wellbeing of the economy, price increment is ideal. At this point, mark my words, the most important thing to talk about is the survival of the country. With the falling or crash of oil price, investors are pulling out because of exchange rate uncertainties and availability, the government has no choice than to deregulate the oil sector. If it does, people can be allowed to source petroleum products, using any source of forex. Some might barter crude for refined products, others might refine, some others might export other products and use the forex obtained to do business in the sector. If we refuse to deregulate and allow price to modulate itself, our option will remain to continue to subsidize the price and as you are aware, fuel subsidy is the biggest scam on earth. Government must bother about the health of the people, shelter for the people, education, etc; as these are enablers of the general economy. Government must do more in offering near to free-education, ensure that National Health Insurance covers all. There must be revolution in agriculture. The people should be assisted to survive. In India for example, government subsidises their staple food price. In Nigeria, we have not seen any. Government must be considerate with the people.
Government said that it has not fully deregulated the downstream sub-sector. What is your take on subsidy removal and the partial deregulation embarked upon by the government?
Subsidy removal cannot come at a better time than now. Subsidy is a big scam especially in a market where there is no free entry and exit. Those few involved in the market were appointed by the establishment and those few are almost politicians. One of the problems of our country is that we do not follow or allow economic programs to run its full course with consultants and the masses contributing ideas. Every economic programme should be allowed to run its full course. On matters of allowing deregulation of the oil sector, I will opt for the Petroleum Industry Bill (PIB) to be enacted into law. If there are challenges on the bill as it is, it should, without delay be fully assessed and thus become the road map for the expected full deregulation of the oil sector.
Do you think it was a wise decision for government to have calculated the current price of N145 per litre on black market exchange rate? What are the likely implications on this on the future price of petrol?
It is a wrong practice. My research confirms that no country in the world operates a dual exchange rate in the name of black market. Since this new regime came into place, people that don’t need foreign exchange have engaged in the forex trade as a means of livelihood. Recall that Ghana and Romania have gone through this before now. Even Angola is going through it now. My suggestion is that our country should not entrench this dual exchange rate. Government should enact a policy that detects the gap that can exist between CBN official rate and the private market or Bureau de Change Rate. Ghana operates two rates – government rate and BDC rate and the difference in the rates has not been more than five per cent in the past two years. Government must be total and thorough to tackle whatever is the challenge of exchange rate as it is a major determinant of the economic pulse of our country. And exchange rate, if not controlled, by way of regulation, will mess up the current price hike as we may have to contend with galloping price changes as the exchange rate point upwards. In other words, government must come up with a robust regulatory foreign exchange transaction policy/rate to stabilise the economy.
Consumers of petrol are already lamenting the new pricing regime. What do you think government can do to ameliorate the suffering of the consumers?
Government can do quite a lot on the mass transit system as it is practiced in other climes. In South Africa, where for instance, the elderly, children, pensioners etc, are given free transit passes. Major improvement in infrastructure like roads, rail, electricity must be embarked upon without delay. Today, petrol is used by the people to power their alternative source of electricity. Because of bad roads, there are rampant gridlocks on the roads, whereby petrol is burnt out unnecessarily. If the roads are fixed and constant energy/ electricity are assured, the quantum of petrol needed will decrease. Investment in affordable mass housing and policies on rent must be re-assessed. This kind of welfarist enactment should be adapted on a natural scale. Pipe borne water should run again in Nigeria as it did in the 60’s and 70’s. In Lekki where I live, I spend an average of N10,000 monthly in maintaining bore hole. These are aberations that create holes in the pockets of the people and if not addressed in totality, agitation for pay rise cannot abate. In other words, as things stand now, government must look into the demand by Labour to up their minimum wages. And, if we must fight corruption in totality, the salary of a typical worker must be enough to help him/her afford basic needs.
Despite assurances from the government that the privatization of the country’s electricity sector would solve energy crisis, two years after, the country is still in darkness. How do we solve the country’s electricity crisis?
Privatisation in itself is a proven good economic program. So for the Jonathan government and now the PMB regime, venturing into it is worth commending. However, privatization that is not done transparently, that was shrouded in secrecy and was hijacked by politicians cannot provide the right solution to fixing our crisis in the sector. I expect the new APC government to look into the terms and conditions of the privatisation done in the sector to be reviewed progressively. People with requisite competence and funding capability must handle the concessions in the sector.
The right regulatory framework, devoid of red tape and restrictions must also be put in place.