It had been a mixed grill of gloom and bloom on the oil horizon. After a spell of another round of debilitating scarcity of the premium motor spirit (PMS), otherwise known as petrol, the national oil behemoth, the NNPCL, suddenly jerked up the fuel price from between N568 per liter and N617 per liter to between N855 and N897 per liter, depending on the location. And the nation has been quivering from the effect.
Almost about the same time, the $20billion Dangote Refinery launched a sample of the PMS just refined from the ‘chimney’ of his sprawling world class octopus, thus attenuating the gloomy effect of the NNPCL’s hike.
A memo to all NNPCL’s outlets showed that the new price regime took effect from Tuesday, September 3. The hike is a dreary climax of weeks of scarcity that has been a punishing strain to motorists, commuters and other end-users of the product.
In the midst of the scarcity, in which petrol sold for between N960 and N2,000 in Lagos and Ogun states, for example, NNPCL’s relatively cheaper prices had been the elixir that engendered some level of sanity and a convenient alternative for the vast majority of the average population, in spite of the legendary queues in its(NNPCL’s) outlets that could extend to almost a kilometer in some instances. Those prices were also what kept transportation and other costs of living in relative equilibrium.
However, because of the usual multiplier effects of fuel on the population, there has been a surge in transportation costs and food prices following the hike. The development has been generating vitriolic vituperations across the country, with most of the respondents calling for an immediate reversal.
The Nigeria Labour Congress(NLC) is highly miffed by the hike, which it described as a betrayal on the part of the Federal Government since it acquiesced to the N70,000 new minimum wage figure based on the alleged agreement that the government would not hike fuel price to avoid spiraling inflation. Many interest groups also took an umbrage at the hike and demanded a reversal.
Before the hike, NNPCL had, after a desultory spell of denials about the real cause of the intractable regime of scarcity, admitted to its $6 billion indebtedness to international traders, a debt, it said, had hampered efforts to secure fresh supplies of PMS. This in turn had precipitated the prolonged scarcity. The financial strain, the oil giant admitted, had placed considerable pressure on the company and posed a threat to the sustainability of supplies.
“In line with the Petroleum Industry Act(PIA)”, the company’s spokesman, Olufemi Soneye, added in a statement, “the NNPCL remains dedicated to its role as the supply of last resort, ensuring national energy security. We are actively collaborating with relevant government agencies and other stakeholders to maintain consistent supply of petroleum products nationwide.”
The new price template is said to be prompted by the need to accommodate the agreements believed to have been reached between the Federal Government and Dangote Refinery on PMS prices under a zero subsidy regime, in line with the concession to sell crude oil to Dangote Refinery in Naira instead of dollar. The national oil giant is the sole domestic offtaker of Dangote’s PMS under the terms of the agreements.
President Bola Ahmed Tinubu last Friday defended the fuel hike, but pleaded with Nigerians to see it as one of the “hard decisions” necessary for the nation’s economic reforms.
According to a statement signed by his former Special Adviser on Media and Publicity, Ajuri Ngelale, the President reacted while addressing members of the Nigerians in Diaspora Organisation in China (NIDO) and the Nigerian community at the China World Hotel.
Tinubu, who commended China’s economic development, said for Nigeria to attain such development, bold decisions must be taken, citing the recent fuel price hike as an instance. He said: “Nigeria is going through reforms and we are taking very bold and unprecedented decisions. For example, you might have been hearing from home in the last few days about fuel prices.
“But can we help it? Can we develop good roads like you have here? You see electricity being constant in quantity and quality. You see water supply constant and running and you see their good schools. And we are saying we want to hand over a banner without stain to our children?
“What is the critical path to get us there if we cannot take hard decisions to pave the way for a country that is blessed and so talented?”
However, while the President was preaching patience and giving his admonitions in China, the ground was literally quaking back home as individuals and interest groups greeted the fuel price hike with fiery obloquy. Angry epithets spurted out from furious quarters.
The Minority Caucus in the House of Representatives described the hike as “ill-timed and profoundly insensitive” to the current economic hardships facing Nigerians. They called on the Federal Government to promptly intervene and reverse what they called “an unjustified increase in petrol prices.”
The caucus spoke through the Minority Leader, Hon. Kinsley Chinda. He said: “At a time when the nation is grappling with unprecedented economic challenges, including rising inflation, unemployment and the depreciating value of the Naira, any further increase in the price of petrol will only exacerbate the suffering of the average Nigerians.
“The ripple effects of such an increase are far-reaching, impacting the cost of transportation, food and other essential goods and services.This will ultimately erode the already fragile purchasing power of millions of our citizens, pushing more family into poverty.”
Human rights lawyer, Femi Falana (SAN), reacting to NNPCL’s eventual admittance to a debt of $6billion after months of barefaced denial and the fuel price hike, demanded a probe of refined fuel imports, which he described as a “scam”.
“It is high time the importation scam was investigated. I’m not talking of the joke that is going on in the National Assembly. The media must help civil society organizations to expose the fraud.
“Once the government begins to speak about affordability and sustainability in response to growing queues at filling stations, there are problems,” Falana said on Channels Television.
The NLC, which, like we noted earlier, felt a deep sense of betrayal, demanded an immediate reversal of the hike. NLC President, Joe Ajaero, recalled a meeting held with President Tinubu during the national minimum wage(NMW) negotiations where they were allegedly given the options of either N250,000 NMW with a rise in pump price of between N1,500 to N2,000 per liter or N70,000 NMW with the pump price of N568-N617 per liter retained.
“We opted for the latter because we could not bring ourselves to accept further punishment on Nigerians. But here we are, barely one month after and with government yet to commence payment of the new national minimum wage, confronted by a reality we cannot explain. It is both traumatic and nightmarish,” Ajaero declared almost in exasperation.
Now, the initial exhilaration that greeted Dangote Refinery’s readiness to role out his PMS into the Nigerian market is beginning to ebb. It appears negotiations between the Federal Government and Dangote Refinery have broken down. Dangote had said he was waiting for the government, which will fix the price of his petrol, for him to roll out.
But NNPCL has begun to sing a different song. First, contrary to the expectations that government would fix the price, NNPCL’s spokesman,Soneye, demurred. He said the price will be determined by market forces. He added that local refining of petrol does not necessarily guarantee lower prices since they(prices) are principally determined by market forces and exchange rates.
Second, NNPCL has also made a volte face over the ‘offtaker’ deal arranged with Dangote Refinery. Before now, details guiding the circumstances under which NNPCL would be the offtaker of Dangote Refinery’s product were inchoate and largely opaque. This stirred an opprobrium from some stakeholders, who saw the ‘offtaker’ deal as a ploy to eliminate competition and prevent Dangote Refinery from selling at reasonably lower prices to Nigerians.
But in response to the outbursts from the stakeholders, NNPCL said it would fully offstake PMS from Dangote Refinery only if the market prices are higher than the pump prices in Nigeria. Soneye said, otherwise, Dangote is “free to sell directly to any marketer on a willing buyer , willing seller basis, which is the current practice for all fully deregulated products”.
Following NNPCL’s volte face, Dangote Refinery is said to be seriously contemplating exporting his PMS instead of selling in Nigeria, if NNPCL would not be buying again. If this happens, it means the nation is back to square one. It indicates that the status quo remains and fuel imports continue!
And that will be a befuddling anti-climax and a frazzled turn to all the effervescence that has attended the entrance of Dangote into the oil fray. This should not be. Hence, we admonish the Federal Government to immediately intervene decisively and, with all sincerity of purpose, partner with Dangote in his ultimate effort to ease off the stress and strains of the interminable fuel debacle for Nigerians.
To leave fuel price to now begin to flounder helplessly against the headwinds of unpredictable market forces like a rudderless kit is to push Nigerians further into a punishing abyss. Moreover, it will be the triumph of the fuel importation cartels who have evidently not been happy at the prospects of Dangote Refinery’s initiative to finally Nigerians from their stranglehold.
Besides, it will be a nationally and international odium for the nation to continue to import the finished products, while Dangote Refinery exports its own as well, even when it can satisfy our local consumption! This should not be allowed to be. Never!
