.Decries rising costs on businesses, declining purchasing power

The Director-General of Lagos Chamber of Commerce and Industry (LCCI), Dr Chinyere Almona, has urged the Federal Government to implement a six-month petrol price reduction programme aimed at lowering pump prices by at least 20 per cent, warning that stabilising prices at elevated levels cannot provide sufficient relief for businesses and households.

Adding that the present intervention, which is yet to be felt as many petrol stations are still selling well above the recommended benchmark, she said it should be complemented by a clear, measurable and sustainable plan to reduce domestic petrol prices and ease operating costs across the economy.

She noted that the proposed mechanism is economically justified, particularly as rising energy and transportation costs continue to put serious pressure on businesses, weaken household purchasing power and undermine the competitiveness of Nigerian enterprises.

She added that the government’s proposal acknowledges the significant consequences of excessive energy price volatility for the wider economy and offers a means to introduce greater predictability into petrol pricing without necessarily returning to the former fuel subsidy regime.

However, she stressed that price stability alone cannot restore business competitiveness if petrol remains unaffordable.

“While price stability is desirable, stability at an excessively high price is not sufficient to restore business competitiveness,” she said, adding that Nigeria needs a mechanism that delivers both price stability and progressive reductions in petrol prices within a defined period.

She expressed concern that the proposed arrangement, in its present form, might protect businesses against sudden price increases without reducing the staggering cost of energy.

She lamented that businesses are grappling with high electricity tariffs, substantial spending on alternative power generation, rising logistics costs, expensive financing and other structural constraints. She added that rising petrol prices compound these challenges by raising the cost of distribution, transportation, production and the delivery of goods and services.

She said although the proposed price ceiling could moderate the immediate transmission of international crude oil price and exchange-rate shocks, it doesn’t guarantee a decline in petrol prices to levels that would provide meaningful relief for businesses and consumers.

Raising concerns about the proposal to require refiners and importers to absorb temporary cost increases and recover them when market conditions improve, she said this arrangement might create deferred cost obligations, which could exert renewed upward pressure on prices if they are not transparently accounted for and recovered within clearly defined limits.

Consequently, she urged the Federal Government to work with domestic refiners, petroleum marketers, regulators and other relevant stakeholders to establish a six-month Petrol Price Reduction Programme.

The proposed programme, she said, should target a reduction of approximately 20 per cent in petrol pump prices from the prevailing national weighted-average price, subject to independently verified supply costs, prevailing market conditions and the sustainability of the measures adopted.

For the programme to be credible and commercially sustainable, she outlined five additional measures the government should implement.

First, improved domestic crude oil supply to refineries, arguing that Nigerian refineries should have more predictable access to crude under transparent and commercially viable arrangements; quick deployment of alternative transportation mechanisms, including the compressed natural gas (CNG) initiative, electric vehicle infrastructure and other interventions capable of reducing the cost of moving goods and people across the country and measures to reduce avoidable logistics and distribution costs. She urged the government to work with industry operators to address transportation bottlenecks, improve storage and distribution infrastructure, and eliminate unlawful charges and rent-seeking practices that inflate pump prices.

Fourth, she advocated exchange-rate and macroeconomic stability, noting that petroleum supply costs remained sensitive to exchange-rate movements and international prices.

Finally, she stressed the need to protect commercial viability and ensure fiscal transparency in implementing the price-stabilisation arrangement.

She warned that the mechanism must not impose open-ended losses on refiners and importers, discourage investment or trigger fuel shortages.

She urged the government to assess the proposed intervention not merely by its ability to prevent sudden price increases but by its contribution to lowering operating costs and improving economic welfare.

“Our position is clear: we welcome the government’s intervention to moderate price volatility, but the next step must be a credible plan to bring petrol prices down progressively, sustainably and transparently,” she said.

“Businesses have demonstrated considerable resilience in the face of high operating costs, but resilience alone cannot sustain competitiveness indefinitely. Businesses need an environment in which energy is affordable, logistics more efficient, investment commercially viable and government policy interventions capable of delivering tangible economic benefits. The impact of the government’s measures must be reflected in lower petrol expenditure for businesses, reduced transportation and distribution costs and meaningful relief for consumers.”