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Lingering petrol price and the economy

By Editorial Board
08 March 2021   |   3:55 am
Public apprehension over rising global oil prices coupled with the Federal Government’s reported plan to increase petrol freight and by extension petrol price is the result of absence...

Cars queue to buy petrol at the NNPC Mega petrol station in Abuja, Nigeria. REUTERS/Afolabi Sotunde

Public apprehension over rising global oil prices coupled with the Federal Government’s reported plan to increase petrol freight and by extension petrol price is the result of absence of a clear official policy on deregulation of the downstream sector by the Federal Government. This is deplorable for its tendency to expose the Nigerian masses to undue exploitation, as garnered by the hike in the pump price of petrol in different parts of the country.

It is disturbing given that Nigerians have steadily borne the negative impacts of mismanagement of the oil wealth and have been exploited from the vagaries of oil prices. The frequent increase in the pump price of petrol is unsettling and will continue to affect the stability of the country’s economy. There should be a stop to exploitation of the masses using oil, of which Nigeria is a major producer.

The Petroleum Equalisation Fund (PEF) policy, which the freight increase seeks to address, is a failure due to unmitigated corruption plaguing the oil industry. It needs to be emphasized that the failure of government to stabilize the downstream oil sector, despite all the opportunities it had, coupled with the high price, is a major misnomer for which government must be fully accountable for. If nothing else, that failure has been worsening the poverty of the average Nigerian, and remains a major potential cause of general instability in the country.

For instance, the pump price of petrol has hardly been uniform across the country, except, perhaps, Lagos and Abuja, where petrol sells at the official price; virtually, in all the other locations across Nigeria, petrol prices sell over and above the official price, notwithstanding that government spends billions annually in an attempt to bridge the price gap. Government equally needs to explain the relevance of subsidy in the petrol price saga after years of stopping official involvement in that sector.

And to complicate an already complex problem, the Federal Government reportedly said that governors would have the final say on fuel price. What exactly does this mean when the governors are neither part of the NNPC, DPR or have any direct stake in the oil business?

For the marketers, an increase in the global price of crude should naturally reflect in the retail price of the petroleum products while government’s control and monopoly of imports should be liberalised for other players. However, there are concerns because whenever oil prices dwindle, marketers hesitate or fail completely to adjust pump prices downward. And government looks the other way, again leaving Nigerians to suffer the consequences.

Indications are rife that some petrol marketers in Abuja, Lagos, Benin, Asaba and other cities in the country are already selling the product for as high as N175 per litre, when the current official price was pegged at N162. Increase in price of crude oil at the international market portrays a scenario that the pump price of petrol is bound to increase. But how can government justify this in a situation of economic hardship evident in the high cost of living and unprecedented human suffering?

The Group Managing Director of the Nigerian National Petroleum Corporation, Mele Kyari, represented by the Chief Financial Officer, Umar Ajiya, said upon the conclusion of deliberations, the labour and the Federal Government would announce an effective date of the pricing template. Government should recognize that any policy that worsens the plight of Nigerians is bound to be resisted.

What exactly is happening to the funds being expended by government on PEF? Who is feeding on the huge sums of money without doing the job? And why does government continue to waste money in what is clearly a fraudulently compromised scheme? Clearly, the purpose of PEF has been defeated.

That the PEF is flagrantly fleecing Nigerians is not in doubt. There is need to re-think the scheme to make it more effective in serving public good. Otherwise, what is happening now is brazen act of wickedness by some unscrupulous elements who are feeding fat from the scheme.

Whereas the official price of petrol is N165.7 per litre, consumers in many states, for instance, buys the pump price for N170, up from from N165 per litre. The situation is worse in the far northern states where prices vary from N175 and above. The huge price differential makes nonsense of the Petroleum Equalization Fund. There should be a stop to the racketeering.

Perennial and intractable problems abound in the oil sector. Every now and then, speculations are rife either about looming price hike or subsidy removal or retention. It is not clear whether or not subsidy has been removed or retained. There is confusion as to what the true position is. Government should come out clearly on this issue, in the interest of the average citizen.