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Don’t hike fuel price

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fuelIt is curious that state officials are speaking in tongues again about the old bogey called “fuel price hike” and the devourer known as “fuel subsidy.” The spin-doctors are on the match again and members of the public are again looking in the direction of who are what to believe about appropriate fuel price and status of subsidy.

What is clear to the discerning public amid this confusion is that the glut in the global oil market supply, which has expectedly crashed the price of petroleum products all over the place is presenting a different scenario to Nigerians who have been paying more instead. This is inexplicable. Even the Nigerian National Petroleum Corporation (NNPC) has slashed the prices of 20 of its oil grades by at least $1 per barrel in an effort to regain market share and beat growing completion. This is sensible in the face of sustained low price hovering around $50 per barrel. But this is not reflecting in the domestic market operations and market.

Government had in May this year raised the pump price of petrol (PMS) from N86.50 to N145, the highest ever, to satisfy the demand of marketers. That was thought to be the end of fuel price hike, at least for now, but feelers in recent weeks seem to suggest otherwise.

Although there have been denials of imminent price hike by the NNPC, Nigerians still are confused since earlier report of inevitability of a hike was credited to the same NNPC. Whatever the true situation, any suggestion of another fuel price hike, smacks of gross insensitivity and callousness on the part of government that has not addressed the economic implications of the price hike barely five months ago.

To contemplate such an increase again at a time when millions of Nigerians are hardest hit by a worst economic downturn is unthinkable and totally unacceptable. As we said in our previous editorials, Nigerians will, most likely, be forced to resist any such cruel attempt to hike fuel price again. What consideration does the Buhari administration have for the suffering masses of this country?

The background to the current confusion: The Group General Manager, Crude Oil Marketing of the NNPC, Mele Kyari had reportedly declared that it was impossible to sell petrol at N145 per litre. He was credited with stating this at this year’s Oil Trading and Logistics Expo, OTL, held in Lagos. According to him, given the difficult business environment and the current forex rate, it is impossible, today, to take products to retailers and sell at N145 per litre. Questioning why petrol can’t sell above N145, he said this is where legislation should come in. But he didn’t elaborate, according to the credible report.

Kyari was emphatic that the current price was unrealistic but noted in the same vein that any official increase by government would not go down well with the people, as it would be resisted. Good enough that he recognised that Nigerians would not accept any fuel price increase at the moment.

Curiously, Kyari’s reported statement was debunked by the NNPC Group General Manager, Group Public Affairs Division, Garba Deen Muhammad, who told reporters that there was no plan to hike petrol price. He said the report that the N145 per litre was no longer sustainable was made in the context of technical and logistic issues. Muhammad said if there was going to be any increase the agency responsible for price review would definitely sensitise Nigerians.

According to Muhammad, NNPC has procurement contracts for supply of product beyond the last quarter of the year, insisting that at present, supply had outweighed demand for petrol at filling stations. He said the complaints by importers over forex scarcity had been addressed to their satisfaction with a new window opened for them. He has added that there had been reports of stranded forex that nobody was ready to pick up, which has effectively closed the chapter on forex scarcity.

It is clear from the foregoing that the teething issues hampering fuel importation a couple of months back have largely been handled. This is evident in the availability of petrol in filling stations across the country. Fuel queues have become a thing of the past. Besides, deregulated pump prices have been noticed across the country.

While the NNPC is lamenting the unsustainability of the current price of N145, many filling stations are selling at N140 per litre below the official ceiling price. It is, therefore, contradictory for the NNPC to be lamenting what it termed “unrealistic price” (according to NNPC’s Kyari) when some marketers are presumably comfortable selling at lower prices.

Given the current oil glut in the international market and reported removal of forex constraints, what other reasons have the NNPC and the marketers to hike price? At the moment, Nigerians have low purchasing power. The demand for petrol has also drastically reduced from available reports. Evidently, vehicular traffic has reduced as a result of collapsed purchasing power of the people.

Simple economics holds that when there is surplus supply the price goes down. Why then does the government want prices to go up even in the face of low demand? It doesn’t make any sense. Government should think twice. All the issues should be put together in proper perspective to show rationality. There seems to be no thinking on the vexatious issue. All that government wants is money from famished citizenry.

Sundry resort to fuel price hike, always points to administrative ineptitude. Some experts will term that paralysis of analysis in governance process. This should not be the case. It is unconscionable to raise price twice within a short space of time as if that is all that government is elected to do to raise revenue profile. That is not good for the image of government.

In the main, the people expect government to deal decisively with opaqueness and indeed monumental corruption long associated with the omnipotent and untouchable NNPC that is always at the centre of fuel price hike and fuel subsidy. Since May 2015 when this administration began, there has been no remarkable policy instrument to reform the oil giant, NNPC beyond meretricious personnel changes that have changed nothing. That is what the Buhari government should face frontally, not another fuel price hike.


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Fuel priceMele KyariNNPC
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