A few hours ago, the Group Managing Director and Chief Executive Officer of the Nigeria National Petroleum Corporation (NNPC), Malam Mele Kyari announced that the price of petrol could jump as high as N320 and N340 from February 2022. The NNPC GMD/CEO said that the price increase would be consequent on the plans by the Federal Government to remove subsidy on Premium Motor Spirit also commonly referred to as petrol or fuel. The grand optimism of the NNPC GMD was predicated on the claims that the removal of the fuel subsidy is now backed by an act of parliament probably the Petroleum Industry Act which was recently signed into law.
The assertion of the NNPC GMD was re-echoed on the 23rd of November 2021 by the Honourable Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, at the launch of the World Bank Nigeria Development Update (NDU), titled ‘Time for Business Unusual’ where she announced government’s plans to disburse N5000 to 40 million poorest Nigerians each as transport grant to cushion the effect of the planned removal of the fuel subsidy.
The disclosures by the NNPC GMD and the Minister of Finance were in symphony with the positions of the World Bank Country Director for Nigeria, Mr. Shubham Chaudhuri and the International Monetary Fund urging the Federal Government to do away with fuel subsidy.
The response of the Nigeria Labour Congress is that what we are hearing is the conversation of the Federal government with neo-liberal international monetary institutions. The conversation between the government and the people of Nigeria especially workers under the auspices of the trade union movement on the matter of fuel subsidy was adjourned sine die so many months ago.
Given the nationwide panic that has trailed the disclosure of the monologue within the corridors of government and foreign interests, the Nigeria Labour Congress wishes to posit that it continues to maintain its rejection of deregulation based on import driven model. It is difficult to convince Nigerian workers why our dear country is the only country among the OPEC member countries that cannot produce its own refined petroleum products and thus adopts the neo-liberal import production model of refined petroleum products.
We wish to reiterate our persuasion that the only benefit of deregulation based on import driven model is that Nigerian consumers will infinitely continue to pay high prices for refined petroleum products. This situation will definitely be compounded by the astronomical devaluation of the Naira which currently goes for N560 to 1US$ in the parallel market. Thus, any attempt to compare the price of petrol in Nigeria to other countries would be set on a faulty premise as it would be akin to comparing apples to mangoes.
The contemplation by government to increase the price of petrol by more than 200% is a perfect recipe for an aggravated pile of hyper-inflation and astronomical increase in the price of goods and services. This will open a wide door to unintended social consequences such as degeneration of the current insecurity crises and possibly citizens’ revolt. This is not an outcome that any sane Nigeria wishes for.
The argument that the complete surrender of the price of petrol to market forces would normalize the curve of demand and supply as is being wrongly attributed to the current market realities with cooking gas, diesel and kerosene is very obtuse. The truth is that these commodities which Nigeria can easily produce have been priced out of the reach of most Nigerian families with majority of our people resorting to tree felling and charcoal for their energy needs.
Finally, we wish to warn that the bait by government to pay 40 million Nigerians N5000 as palliative to cushion the effect of astronomical increase in the price of petrol is comical, to say the least. The total amount involved in this queer initiative is far more than the money government claims to spend currently on fuel subsidy. Apart from our concerns on the transparency of the disbursement given previous experiences with such schemes, we are wondering if government is not trying to rob Nigerians to pay Nigerians? Why pay me N5000 and then subject me to perpetual suffering?
Clearly, government thoughts on the so-called removal of fuel subsidy is cloudy and appears to be a “penny wise-pound foolish” gamble. It is clear that the palliative offered by government will not cure the cancer that will befall the mass of our people who suffer the double jeopardy of hype-inflation while their salaries remain fixed.
As we had done several times, we call on the federal government to consider various options that can help Nigeria navigate out of the quagmire constructed by the failure of successive governments to embrace developmental governance and accountable leadership. Some of the viable options that can help include:
Insulate the domestic consumers from the market pressure brought about by the free fall of the Naira by making arrangement with contiguous refineries not far from Nigeria to swap crude oil with refined petroleum products;
Accelerate work on the rehabilitation of Nigeria’s four major refineries which are all currently operating at near zero installed capacity; and Establish empirical data on the quantity of refined petroleum products consumed daily by Nigerians. It is unfortunate that this record remains a myth and a huge crater for all manner of official sleaze and leakages in the downstream petroleum sub-sector of Nigeria’s oil and gas industry.
A stitch in time might save nine!
Comrade Ayuba Wabba, mni
24th November 2021