Outrage as high cost of petrol, scarcity push businesses to brink

• TUC, PDP reject fuel price increment, assault on citizens
• ‘Increase has pushed Nigerians to precipice, challenged them to react’
• MAN, LCCI, others warn of looming job loses
• ASBON: Hike is final nail in coffin of businesses already on life support

Business owners, analysts, and ordinary citizens across Nigeria expressed anger yesterday over the ongoing petrol scarcity and the sharp increase in fuel prices.

They also criticised the government for its lack of empathy and disregard for the well-being of its citizens.

The outcry followed the adjustment of petrol pump price by the Nigerian National Petroleum Company Limited (NNPCL) in many states with prices varying from N855 per litre ot over N900 a litre.

Reacting, the Trade Union Congress (TUC) said the increase will push more people into poverty and significantly impact the country’s social and economic life.

It said: “The timing and magnitude of these increases, in the absence of any meaningful social security measures, demonstrate a lack of empathy and understanding of the challenges ordinary Nigerians face.”

Therefore, the Congress urged the Federal Government to engage with relevant stakeholders to explore alternatives to frequent fuel price hikes, especially considering low wages, diminished purchasing power and increasing poverty levels.

TUC President Festus Osifo said: “This sudden hike, implemented without consultation with critical stakeholders, represents a blatant disregard for the welfare of the Nigerian people, particularly the working class who bear the brunt of such decisions.

“The disturbing news of the increase in PMS pump prices across the country has caused widespread apprehension and depression. This is in the wake of unprecedented hardship already faced by citizens.”

Osifo wondered why it should always be “the common Nigerians bearing all the pains of the high cost of living while those in power enjoy increased allocations and affluence?”

He said: “The government has not made any concerted efforts to reduce the cost of governance or personal effects, nor have they focused on directing resources or enacting policies that would strengthen the naira and improve the standard of living of our citizens.”

The union leader lamented that the ordeal came “when the government embarked on a series of price increases, with electricity tariffs rising by about 250 per cent since Bola Tinubu became President. In addition, we are deeply troubled by the further hike in electricity tariffs to 250 per cent, a service essential for the survival of the poorest in our society.”

Similarly, the opposition Peoples Democratic Party (PDP) criticised the increase as “a harsh attack on the well-being and sensibility of Nigerians by the insensitive and arrogant All Progressives Congress (APC) administration.”

It said: “The sudden rise in fuel prices, especially at this time, could lead to a crisis as Nigerians are already struggling with severe economic hardship under the current APC administration led by President Bola Ahmed Tinubu.”

In a statement by National Publicity Secretary Debo Ologunagba, the PDP said: “The opaque and corrupt management of the petroleum sector and continuous fuel price hikes under the Tinubu-led administration, without consideration for the people’s well-being, is akin to pushing Nigerians to the brink and challenging them to react.”

The party noted that the Federal Government “consistently demonstrates a lack of concern for the suffering of millions of Nigerians who can no longer afford daily necessities, medical care, and basic support for their families due to the catastrophic high cost of living brought on by insensitive and reckless policies.”

It lamented that “under the APC administration led by Tinubu, over 150 million Nigerians have fallen below the poverty line, businesses are collapsing daily, the naira now exchanges for over N1,600 to a dollar with over a 34 per cent inflation rate, and over 40 per cent unemployment, all of which are expected to worsen with the recent draconian increase in fuel prices.”

The statement reads in part: “The acknowledgement by the APC-led Federal Government that it has handed the fate of Nigerians to oil racketeers in the name of a free market economy further confirms the PDP’s stance that the Tinubu-led government has neglected the primary purpose of governing, which is to provide for the welfare and security of the citizens.

“President Tinubu, as the Minister of Petroleum Resources, cannot absolve his government and officials from the secretive and fraudulent management of the petroleum sector, rapidly pushing our nation’s economy to the edge.”

The PDP expressed dismay that the government continues to raise fuel prices “despite the shocking revelation in the public domain that it is covertly paying a massive N5.4 trillion as fuel subsidy for 2024.”

The Director-General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi Kadir, regretted that Small and Medium Enterprises (SMEs), which often operate on thin margins, would be particularly hard hit, and that small businesses across the country would be forced to scale down operations or completely shut down.

He said the hike would result in high operational costs in terms of transport and logistics, and businesses unable to pass the cost to customers might be forced to close shops. This would lead to higher transport fares and increased costs for goods and services, leaving citizens with reduced disposable income.

He further noted that a decline in purchasing power could lead to lower demand for non-essential goods and services, affecting businesses across various sectors, triggering a rise in inflation and putting additional strain on household budgets.

Ajayi-Kadir noted that the manufacturing sector would likely face negative impacts, with businesses potentially adjusting their pricing. This could result in reduced profit margins as consumer demand weakens.

“One is naturally worried about the impact on the already lacklustre performance of the manufacturing sector. Undoubtedly, it will add to production inputs and logistics costs, leading to higher prices and dwindling disposable income of the average Nigerian,” he added.

Also, the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr Chinyere Almona, said that while the petrol subsidy is unsustainable, removing it completely and subjecting Nigerians to a significant fuel price hike presents significant challenges.

She said the hike would trigger widespread price increases, reversing the recent easing of inflation in July and leading to another surge in inflation rates.

Pointing out that the impact on businesses will be severe, she said logistics, power generation, transportation and factory operations will be adversely affected. “The cost of doing business will skyrocket, prices of goods will rise, and some firms will shut down due to low demand in the face of weakening consumer purchasing power. Of course, this will be followed by job losses.”

Almona said the situation is critical when considered against the background of NNPCL, which owes suppliers about $6 billion.

The president of the Association of Small Business of Nigeria (ASBON), Femi Egbesola, said: “With this new increase in the pump price of petrol, we don’t need a soothsayer to tell us that inflation will skyrocket. With this development, I foresee an increase in inflation of above 10 per cent. This is saddening in an economy where inflation and price increases are not commensurate with workers’ and average citizens’ incomes. The expected minimum wage increase, which is yet to be implemented, will be eroded by the inflation that the new pump price increase will cause.”

He said: “For MSMEs, this increase is a death knell. Millions of small businesses are dead already. Many more are ailing and struggling to survive. This development will cause more MSMEs to pack up, leave others on life support and reduce the profitability of the existing ones. It’s impossible to pass the bulk of the price increase on to consumers whose disposable income is already depleted to breaking point.”

The founder of Kazih Kits Ltd, Chinedu Otakpor-Azih, regretted that they suspended night production for now and placed the workers on leave. She said diesel and petrol costs are now on par, and the workplace can no longer sustain two shifts.

“We have been running on diesel at N1,150 per litre. In the past, we used a diesel generator during the day and a petrol generator at night, but we can no longer do this. We have stopped using the petrol generator and only use the diesel generator for day operations and have stopped the night shift. Transport and other expenses have increased by 100 per cent; these problems are too much, and I am not sure how to proceed,” she said.

Muinat Atunnise of Atunnise Clothiers decried that the current cost of petrol is unsustainable and will wreck many businesses.

“Even at almost N900 per litre, we cannot get fuel to buy. I was in the queue from 9:00 a.m. till about 5:00 p.m. on Monday and yesterday and still did not get fuel. Look at the number of wasted man-hours. The black market is selling it at N1,200 per litre, which I cannot afford, and we have had to suspend operations because there is no electricity. When we finally got some at one NNPC station, we were told to pay N1,000 extra every five litres (on top of the fuel cost). This is not how to run a business,” she lamented.

For his part, the Social Democratic Party (SDP) presidential candidate, Adewole Adebayo, warned against equating the fortunes of Nigeria’s energy industry with a single company, Dangote Refinery.

Adebayo said proper economic planning requires a comprehensive energy supply chain strategy rather than relying solely on one refinery.

While acknowledging the potential benefits of the Dangote Refinery, Adebayo highlighted the logistical challenges of transporting refined products across the country.

He stressed the need for a general policy framework to support the establishment of refineries in Nigeria and ensure equal opportunities for all investors.

Adebayo also emphasised the importance of revitalising Nigeria’s existing refineries, ensuring they are functional and not ‘dead wood’.

He called for an end to spending money on turnaround maintenance without achieving tangible results.

Additionally, Adebayo advised the Federal Government to treat the current petroleum scarcity and the attendant hike in pump prices as national security matters.