New fuel pricing debate and the pains of the masses

By Rahaman Onike


The ongoing fuel pricing debate in the country is not only expected, it has proven the true nature of dynamics of change in social order. Before the government took the decision to hike the pump price from N86 to N145, the risk factors and possible reactions ought to have been properly considered and envisaged.

Whether it is the new fuel pricing regime or the removal of subsidy being speculated as the problem, the fact still remains that the decision is a risky political calculation.

Moreso, little time was allowed for sensitization and awareness of the policy implications before the announcement of the new fuel price. The short and long term benefits of the new pricing regime of N145 per litre notwithstanding, inaquate time for sensitization could not have prevented the public outcry.

With the reactions from the masses, it is clear the situation in the country is not palatable enough. Of course, new pricing regime would not have been introduced when there are persistent fuel scarcity and incubus economic meltdown resulting to irregular payment of workers’ salaries by some state governments.

Before introducing the new fuel pricing regime, governments should have come up with measures to shield the poor from the worst effects of the policy.

The admittance by the Vice President, Prof. Yemi Osibanjo that our local consumption of fuel at a time was almost entirely imported really calls for serious rethink.

If truly the Nigerian National Petroleum Corporation, (NNPC) has only capacity to provide 50 percent of local consumption, it is imperative to examine the role of independent marketers in fuel importation.

Since the assumption of office by President Muhammed Buhari, one problem identified as being a major challenge that has largely eroded the government goodwill is the persistent fuel scarcity.

It is therefore not out of point that government is desperate to extenuate the challenge of fuel scarcity which is caused by the cabal of subsidy fraudsters and smugglers.

Given the nation’s past experiences with atrocious oil marketers, the president’s decision to reallocate funds which were previously earmarked for the fuel subsidy for financing other socially productive services is commendable.

No doubts, the masses are bound to experience inconveniences and should be ready to endure the associated pains before reaping the gains.

Some of us opposed earlier attempts to deregulate downstream sector of pertoleum industry due to the exigency of the time and inability of the then governments to elicit genuine public confidence in their policy formulation and implementation process.

With over N2.3 trilion expended on subsidy in 2011 by the Jonathan administration and without any visible or impacts felt, that made some of us to support 2012 #OccupyNigeria struggle.

Before the introduction of new pricing regime by the present administration few days ago, petrol is already being sold at higher prices. Worse still, the product is still not readily available. Even when government decided to make NNPC the sole importer of petroleum products, the measure could not clear the shortage.

With the prevailing situation in the country, deregulation is a half-solution without revamping our domestic refining capacity so that 100 percent of Nigerian fuel consumption is supplied from domestic refineries as used to be the realities of 1970s and 80s in the country.

Despite the turnaround maintenance, TAM, repairs and incentives for private investment in refineries, the nation has not been able to achieve significant local refining capacity.

Perhaps the problem would end when Dangote’s refinery completes and starts operation, as it is envisioned that the company will impact significantly on local production of petroleum products for domestic consumption in the country.

From all indications, the decision to hike the pump price was not hinged solely on subsidy removal rather as a strategic measure to address insufficient access to foreign exchange by the independent marketers.

I quite agree that access to foreign exchange through the Central Bank of Nigeria (CBN) sources by the importers have positive effects on the pump price. It is therefore necessary for the government to review any of its restrictive measures which have the tendency to cause fuel scarcity and arbitrary hike in pump price.

This is because, without access to foreign exchange at official rates, it might be difficult for independent marketers to sell at official price.

Now that people are expressing discontent over the new policy regime, what sustains the public support for the administration is Buhari’s integrity and public trust currently enjoyed by the government.

Indeed, the prospects of the new pricing regime is not by mere theoretical postulations of demand and supply law of Economics.

Obviously, masses of our people are not cared of the letter and spirit of any economic measure introduced by the government, once it does not affect them negatively.

In my view, there are greater prospects in hiking the pump price by the government as a strategy to overcome the challenge of inadequate access to foreign exchange by the independent marketers, if the policy will help solve the problem of scarcity through improved fuel importation by the independent marketers.

It is also my considered opinion that the resulting competition would not only make supply abundant but will equally force down the pump price through inter-play of market forces.

Again, the possible outcomes of the new pricing regime also depend on control, monitoring procedures and deterence that may result after successful prosecution of perpetrators of subsidy frauds in the past. Except people involved in subsidy frauds are brought to book, the current efforts may not yield the desired results.

It is against this background that I support those calling for the introduction of policy measures to cushion the harsh effects of the new pricing regime of N145 per litre.

Also, the parasites among the elite who had defrauded the nation in the past through diversion of subsidy funds should be made to refund the loot, otherwise they should enjoy reasonable parts of their lives in jail.


Rahaman Onike; author, public administrator and policy analyst writes from Oyo, Oyo State.




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