Group raises concern over ‘managed’ deregulation
Concerned Nigerians have expressed worry about the government’s inability to allow market forces to determine petrol pump price, noting that the distortion affects market operation and pricing.
The Convener, ‘Let’s Do It Right’, Olaitan Philips, recalled that on December 7, 2020, the Minister of Labour and Employment, Chris Ngige, announced that PMS pump prices would henceforth be fixed at N162.44 per litre effective December 14, 2020, after days of deliberation between his ministry and labour leaders.
However, the directive has yet to be implemented by marketers, who have continued to sell at between N165 and N167.
Philips said the announcement of the Minister suggests that Nigeria will soon be back to the era of subsidy.
According to him, the government had spent over N10 trillion in the twelve years up to 2018 while unbudgeted N1.1 trillion was spent in 2019 alone.
He continued: “Many pertinent questions arise from this pronouncement by Ngige. Should petrol pump prices be fixed by mere negotiation between the government and labour?
“The pronouncement was abrupt and unanticipated, considering that there were no consultations with the fuel distributors and the business community this change of direction will affect.
“The negotiation between government and labour, arriving at a reduction of N5 does not take into consideration the current rise of prices at the international market,” he said.
A financial expert, Anderson Julius, is of the view that the approach of negotiating petrol pump prices between the government and labour without the involvement of investors further diminishes investors’ confidence, setting an unprofessional precedent that will be difficult to set aside when parameters that constitute the pump price of PMS rise again.
According to him, direct social programs in small and medium scale businesses that employ the majority of Nigerians would have a more immediate positive impact on Nigerians.
“Watching the government move from having announced a policy objective and itemizing its several benefits and suddenly change its mind with this recent pronouncement under pressure from labour does not breed confidence.
“This policy flip flop will negatively impact investor confidence in government policies and business environment,” he added.
Another financial analyst, Badru Sadiku, recalls that in April 2020, Group Managing Director, Nigerian National Petroleum Corporation (NNPC) announced that the era of subsidy on petrol was over
He asked: “Who benefits from this subsidy fraud? Are they the ones who have trapped us in this unending rigmarole?
“Who pays those salaries of employees in refineries that are not working but incur costs? Do these uneconomic decisions make sense?