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Another hike in petrol price?

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Against the background of arguably the worst economic hardship in Nigeria ever, evident in high cost of living and unprecedented human suffering in the country, insinuations of another increase in petrol products prices are not only depressing, they are insulting.  The mere thought smacks of gross insensitivity and callousness on the part of those contemplating it.

Nigerians will, therefore, have no choice but to resist any such cruel attempt at fuel price increase and further aggravation of their pains as any such plan can only be the product of poor judgment based on jaundiced reflections. It must, afterall, be acknowledged by the leaders that no amount of price increases will solve the country’s mounting economic problems as previous increases never solved any but only compounded the suffering of Nigerians.

Those at the helm of affairs will do well to look into the corruption in the fuel supply system and put an end to it.

The Buhari’s administration, barely three months ago, increased the pump price of petrol from N86.50 to N145, the highest ever. This, it was believed was the final act of removing the phantom subsidy on petroleum products.

Unfortunately, now, at a time when palliatives are needed to cushion the effects of the current severe economic hardship, a new price of N151.87/litre is reportedly being canvassed by marketers.

According to them, with the ex-depot price of petrol at N133.28/litre and a selling price of N145/litre, the difference of N12 is not enough to cover their distribution cost of N18.71, hence, their arrival at a N151.87/litre proposed price.

The specifics of this “distribution margin” for every litre of petrol according to the marketers, include retailers charge, N6; transporters’ allowance, N3.36; bridging fund, N6.2; dealers’ charge, N2.36; marine transport average, N0.15; and admin charge, N0.3. This, to say the least, is outrageous!

First, if an additional cost of N18.71 is indeed required for the marketers to break even, why are some marketers currently selling at N140 per litre instead of the maximum N145 approved by the government? Even the most elementary interest in the fuel supply system has shown how opaque and corrupt it is. Why, on earth, has successive governments in Nigeria failed to deal with this massive corruption in this sector in which a few have fed fat while the nation bleeds?

The details above of course, expose the unpatriotic manipulations by players in the fuel importation and distribution business, which more or less determine the price of petrol. Adding a myriad of charges to the actual cost of petrol by different interest groups is tantamount to fleecing Nigerians. And this should not continue.

Perhaps, the only charge that can be justified is the administrative charge of 3 kobo. All other charges are borne out of corruption, which, unfortunately, are passed on to ordinary Nigerians.

How, for instance, could the N3.36 paid as transporters’ allowance be explained? Is the money meant for the transport owners or the drivers? How come there are transport charges when the tanker owners are paid for the job of fuel distribution?

The same question hangs on dealers’ charge of N2.36. Indeed, there are too many questions! And no one is giving any answers.

While experts say in matters concerning oil pricing, politics overrides economics, definitely, in better-run societies, the N18.71 extra cost on every litre of fuel would have come under the scrutiny of the government of the day. So it is important to ask on what basis the Nigerian government would approve the numerous proposed charges even in the face of its own war against corruption?

In India, for instance, the final price of fuel is determined by three approved components, namely, commission to petrol pump owner, excise duty and value added tax, on gross price including excise, which are charged minimally.

In the case of Nigeria, the six components that have bloated the fuel price apparently go into private pockets. There is no mention of VAT or any other tax, which should accrue to government. Matters like this should therefore engage the attention of President Muhammadu Buhari which should effect changes in line with the anti-corruption crusade of his administration.

Nigeria is a nation which gets its priorities wrong all the time and where the leadership daily short-changes the people. For the purpose of any argument, even if any subsidy remains on petroleum products and if the Nigerian government could subsidise foreign exchange for pilgrims, it should also be prepared to subsidise Nigerians to the extent of a life worth living. The Buhari’s administration should therefore avoid plunging the country into needless crises that could result from any further fuel price increase.


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5 Comments
  • Basil Ogbanufe

    The price of fuel must increase based on the relationship between demand and supply. As long as supply is scarce and demand is increasing price, certainly, must increase to attain equilibrium. The only way price can fall is for supply to increase. The only way fuel supply can increase is through local refining of crude oil. The refineries in the country are not functioning due to ineptitude, incompetence and corruption in government. Meaning, governments over the years have been very bad, and poor, managers of the economy and our commonwealth. Government should hands off the economy for Nigerians to manage. Government can achieve this through outright privatization and liberalization of the economy through the NSE (Nigeria Stock Exchange) by way of IPO (Initial Public Offer). Government should sell (privatize) the refineries to Nigerians through the NSE by way of IPO. This will lead to transparency, accountability and increased productivity in fuel production and distribution, particularly.

    • Truthman

      Which demand is rising? Please visit the nearest fuel station and have a chat with the attendant! Don’t just let it be theory alone.

      • Basil Ogbanufe

        Sometimes, it could be supply is not meeting demand. Even in a case of artificial scarcity, price will increase. The bottom line is how can supply be increased and then controlled to bring the price of fuel to, let us say, N10.00/litre, consistently for years? 1, outright privatization and liberalization of the economy through the NSE by way IPO. 2, government cannot be regulator and operator/manager at the same time. This is corruption. It should hands off the economy. 3, government should sell (privatize) NNPC, Eleme petrochemical company, Kaduna refinery, Port-Harcourt refinery and Warri refinery to Nigerians through the NSE by way of IPO. Saudi Arabia, particularly is controlling the drop in the price of crude by over supplying. There is too much crude oil available, reason its price has been dropping. My dear I hope you understand.

  • Basil Ogbanufe

    I had written to this newspaper when the price of fuel was officially raised to N145.00/litre predicting it will still be raised to N200.00/litre. Certainly, every activity in the economy, particularly of government, is encouraging the raise in fuel price.

  • emmanuel kalu

    we need complete and total deregulation of the whole sector. let market forces determine price, supply and demand. Then we need to focus on ending the importation of refined fuel. There needs to be a massive investment by the government to enable every possible investor to build any size of refinery in any part of the country. modular refineries can be quickly and cheaply installed to begin to reduce our importation. Those illegal refineries could be brought online and made illegal to also help.
    marketers have an ace up their sleeves. if the government doesn’t bow to their wishes, they create scarcity, and since NNPC can’t break the scarcity. Nigerian’s would always be held captive to marketers.