Nigerians woke up on Thursday, September 3, to the news of yet another increase in the pump price of Premium Motor Spirit (PMS), otherwise known as petrol, as fuel filling stations across the country adjusted their meters to reflect the new price regime announced a day earlier by the Nigerian National Petroleum Corporation (NNPC).
The increase came in the wake of a similar hike in electricity tariffs even as there had been no significant improvement in electricity supply to consumers.
The spike in price in the midst of a crippling economic downturn caused largely by the coronavirus pandemic that has sent over a million souls around the world to their graves and brought the global economy to its knees has expectedly been met with condemnation by a cross-section of Nigerians including the main opposition party.
With massive job losses, increasing unemployment and falling standard of living now compounded by the challenge of trying to avoid contracting the coronavirus, critics of the new price/tariff regime say that majority of Nigerians cannot afford to pay more for fuel and electricity, arguing that it was insensitive on the part of the Federal Government to inflict them with a price hike now that they are battling a pandemic.
Prior to the increase, one litre of petrol was selling for N145 but that has gone up to about N162 now and could go higher depending on the price of crude oil in the global market. Electricity tariff was also increased from N30.23 per kWh to N66.
Before the N145 per litre price, a litre of petrol was selling for N86.15 when the All Progressives Congress (APC) came to power in 2015 and took it to N145 shortly after with a promise to address the problems in the downstream sector of the oil industry especially the heavy subsidy regime in place under the previous Federal Government ran by the Peoples Democratic Party (PDP), and make fuel readily available to Nigerians.
Though the government has somehow delivered on its promise of making the product readily available, it says it was at a heavy price of trillions of Naira in subsidy to importers to bridge the gap between (high) cost of fuel importation and (lower) pump price of the product.
And to address this disparity, the Federal Government says it had no choice but to deregulate the downstream sector, remove subsidy and allow market forces to determine fuel prices which might go up or down depending on the cost of production/importation and the profit margin.
The Federal Government put the cost of the subsidy at over N10 trillion in the last eight to nine years, an expenditure it says the government can no longer sustain as it is an unnecessary drain on the economy, especially now that government is earning far less as a result of the effect of the coronavirus pandemic on the global economy.
The money spent on subsidy, it argues, is better spent on developing public infrastructure which would ultimately benefit the masses, as every kobo spent on subsidizing fuel price fuels the corruption in the system and benefits the rich.
It further argues that with the government no longer fixing the price, investors would be encouraged to put their money in the downstream sector to build refineries and similar infrastructure, create jobs, make the products available at a competitive price and ultimately help the economy to grow. In the government’s view, it is a win-win situation.
But critics would have none of this. How can a government that claims to be serving the people inflict them with so much pain under the guise of deregulation?
How can a government that promised so much but has delivered so little; a government that has impoverished many more people than it met, still have the guts to increase prices/tariffs on everyday products like fuel and electricity, they argue.
The organized Labour, in particular, is concerned that in the face of crippling unemployment and stagnant wage, the people are being asked to pay more. The main opposition party, the Peoples Democratic Party (PDP), has been shouting the loudest against the increase, warning against pushing Nigerians, especially the masses to the wall or take their peaceful mien for granted. The party called on the government to immediately reverse tariff/price increase in the interest of the people.
While organized Labour and civil society groups are threatening public protests over the increase, businesses, including the organized private sector has been unusually quiet, a position that has somehow emboldened the government into strengthening its position, with President Muhammadu Buhari even vowing that government would not go back to the pre-deregulation era of fuel subsidy. In essence; price hike has come to stay.
This is a rather dangerous position to take. While we are not against the deregulation of the downstream sector of the oil industry, and indeed, every other sector of the economy, to the extent that it is in the national interest, introducing such measures, as the price increase now, is fraught with challenges and dangers and could, on the long-run, be counterproductive and even injurious to the fragile political, socio-economic state of Nigeria.
While appreciating the circumstances (dwindling public revenue et al) that led to the sudden withdrawal of the subsidy and the subsequent price increase, an advance notice to Nigerians that such was in the offing, followed by a phased withdrawal would have prepared Nigerians well for what to expect. This, coupled with government interventions in critical areas like healthcare, education, transportation and food, would almost certainly erase whatever pain the price/tariff increase would inflict on the people.
The electricity tariff increase, in particular, should have been preceded by a substantial increase in electricity supply to consumers such that they can see and feel why they are being asked to pay more for power supply.
Estimated billing is still a problem, so also is lack of or insufficient pre-paid metres. Consumers are being asked to pay for services not rendered.
The measures put in place by the electricity commission, the regulatory agency in charge of the industry to address these problems, do not appear to be strong enough or abuse-proof.
Even President Buhari’s order putting an end to estimated billing doesn’t appear to hold much water. There should have been a remarkable increase in electricity generation, transmission/distribution before any tariff increase. The transmission infrastructure is so archaic as to render any increase in generation capacity useless.
As the government is building or joining the private sector in building power stations, so it must also put an eye on what the Distribution Companies or Discos are doing, up to the point of getting electricity to every home in Nigeria. There must be a synergy and this synergy must be in place before there can be any meaningful and acceptable tariff increase. Anything to the contrary would be a waste of time on all sides.
We call on the Federal Government to take a second look at this untimely price/tariff increase with a view to fine-tuning it in the best interest of the people and the economy. But the interest of the people must come first.
After all, governments exist chiefly to serve the interest of their people. Even when/where it becomes imperative for tough decisions to be taken, such should be taken with a large dose of human face applied.
Grandstanding as some government ministers are doing to justify the increase will only increase the people’s resentment towards it.
There is a need for engagement with Nigerians on the issue. This ought to have taken place before the price/tariff increase was announced, but it’s not too late to do so and make a review of the measures are truly meant to serve the interest of Nigeria and Nigerians.
