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Fuel price surge and a debit alert!


The Petroleum Products Pricing and Regulatory Agency, PPPRA has increased the price of Premium Motor Spirit, PMS otherwise known as petrol from the benchmark of N86.50K/liter by about 70% after meeting with organized labour, members of the national assembly and the executive arm of government. The announcement came as a rude shock to so many Nigerians because a wider section of the citizenry was not adequately engaged and sensitized.

The progressive government, that Nigerians so overwhelmingly ushered into office, in the minds of so many, has taken them for a bumpy ride so early in the day. Granted, people have been living a black market life around a black market problem before now! Understandable that deregulation is the way to go but have we given a thought to the deregulated life and living that is sure to follow considering our peculiarities as a people?

The Federal Government of Nigeria has surrendered to market forces and the citizenry will now have another set of problems to grapple with in addition to the litany of woes facing them! Yes, petrol will now be available everywhere but at what cost?

In the well-drawn battle that has lasted almost the entire duration of the present government, it would appear the marketers have won while the government and the citizenry have been badly bruised to a state of animated stupor until a more user-friendly approach is worked out. Petrol price, has, over the years, been a very strong determinant of cost of living in Nigeria and it is expected that this new regime of price increase will be no exception.

Transport fares will now increase by almost 100% to allow another profit margin of close to 30% for the operators. Foodstuffs will follow suit in arithmetic progression, House, shop and office rents will join the fare increase and government expenditure will hit the roof, tuition fees and healthcare delivery are expected to travel North with the Naira further weakened southwards while standard of living will quite naturally, depreciate.

The Nigerian Labour Congress, NLC and the Trade Union Congress, TUC are likely going to renegotiate the increasingly unrealistic N18,000.00 minimum wage with Government. Already, Nigerians have started hearing about, with the workers’ looking forward to, the rumoured N56,000.00 minimum wage increase but the question to ask is, can the Local, State and Federal Governments sustain any wage increase at this time when most of the State Governments are unable to pay the N18,000.00 minimum wage as at when due? One state government even paid the salaries of its workers to a different bank account feigning ignorance but the affected workers smelt a killer “Whale”!

Such fraudulent survival tactics in the face of debilitating pain and gratuitous insult inflicted on some workers. In all of this, those painfully and gainfully employed in the private sector that are mostly ununionised and form the bulk of employed Nigerians together with artisans and small scale industrialists that constitute disorganized labour, will now, probably, have their businesses further crippled with attendant job losses to boot.

The pricing template, showed that the landing cost to the nearest dispensing pump, came to a total of N138.11K/litre with regulated price varying between N135.00/litre and N145.00/liter. Posers arising from this sudden deregulation are; Why was it difficult for the PPPRA to engage other stakeholders like transporters, Non-Governmental pressure groups etc before foisting hardship on everyone?

If N145.00/liter is determined by a free market economy at a crude oil international basket price of $47.00/barrel, what happens if the crude oil price travels north or the Naira crashes further? Another round of “wahala”, perhaps. Again, why do we have to pay so much in an era when crude oil price is sleeping south? What is the landing cost of locally refined petroleum to the nearest dispensing pump if we assume the template used is for the imported? Why are we so quick to compare ourselves to developed countries in matters like this without giving a thought to conditions that make market forces flourish in those countries?

What is the guarantee that the oversight agencies will enforce this new price regime if they failed so woefully before now? What is the assurance that marketers will not tarry a while to see the new regime of prices sustained before importing thereby further exacerbating the problem? What are the safety nets put in place to cushion the effect of this sudden increase in the cost of living?

From the analysis above, it is quite clear that deregulation is the key to our evolution but the sudden pain Nigerians need to travel with to evolve is sure going to kill more than heal and with the propensity for chaos of the average Nigerian, it is certain theoretical economics will be rubbished by blind oversight that leaves operators on auto pilot! The good of the greater number is the key thing here, numbers that translate to electoral victory! In the words of Oscar Wilde, anything that can go wrong will go wrong! These are the issues the concerned minister and the President needs to address, otherwise, someone should please, whisper in the President’s ears that, “this surge looks more like a debit alert to the standard of living”!
Kayode Adeoye is an energy analyst from Lagos.

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