Angst heightens as FG says fuel price hike done deal

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*Sylva

There is widespread discontent in Nigeria at the increase in the pump price of petrol announced by the Pipelines Product Marketing Company (PPMC) on August 2.

The company, a subsidiary of the Nigerian National Petroleum Corporation (PPMC) had announced increase in ex-depot price of the product from N138.62 to N151.56 per litre thus driving the pump price of petrol between N162 and N164 per litre.

It would be recalled that petrol prices have increased for three straight months, rising from N121.50–N123.50 per litre in June to N140.80-N143.80 in July, N148-N150 in August and N162-N164 in September.

The price increment came in the wake of August 1 hike in electricity tariff by the country’s distribution companies (DisCos).

In Osun State, the Coalition for Civil Societies today staged a protest in Oshogbo protesting against the hike in electricity tariff and petrol price.

The protesters took off from Freedom Park, Oshogbo displayed placards showing their displeasure over the new tariff regimes for electricity and petrol.

They lamented that “approval of new electricity tariff and increment in the pump price of petrol is the highest level of insensitivity and wickedness from President Muhammad Buhari-led All Progressives Congress (APC) government.”

Speaking on the issue, professor of finance and capital markets at the Nasarawa State University, Keffi and former commissioner of finance, Uche Uwaleke, warned that the hike would heighten inflationary pressure and worsen the living standards of Nigerians.

“This is clearly a downside risk to inflation. In the coming months, I expect inflationary pressure to heighten as crude oil price recovery in the International market necessitates a hike in domestic pump price of imported fuel. This situation will be compounded by naira devaluation.

 “The alternative is petrol subsidy, which the government cannot afford now as this may not have been provided for in the 2020 budget. Again, expecting a government already saddled with huge debt to borrow to subsidize price of petrol does not make economic sense.

“With all the economic headwinds, there is no question about a spike in cost of living in the coming months.”

However, he stated that the solution remained passage of the Petroleum Industry Bill (PIB) into law to pave way for investors in the oil refining sector.

The chairman, senate committee on sports, Mr. Obinna Ogba, said the increases in electricity tariff and fuel price at a time the economy was yet to recover from the effects of COVID-19 is an indication that government is highly insensitive.

“The country and indeed the whole World is facing serious problem right now because of the coronavirus pandemic. Therefore, these increases are not good at all.

“The government is just showing insensitivity to the plight of Nigerians because by increasing the pump price of petrol and electricity tariff, the suffering of the people will become worse. The whole thing is not funny at all.

“You cannot put the blame on the agencies because there is no way any of the agencies can increase the price of its commodity or service without first getting directive from the leadership of the country,” he said.

The country director, ActionAid Nigeria, Mr. Ene Ebi also condemned the increase in fuel price electricity tariff.

“We are not out of COVID-19. A lot of citizens are losing their jobs, people are getting poorer, more responsibility with school closure, young people roaming the streets unemployed and fuel hike at this time is shocking.

“Governance is about easing the pain and burden of the common man, but it seems the Nigerian government is not in touch with the reality on ground.

“We are dealing with too many increases at the same time and this is introducing so much inflation into our lives. Governance is about the people.

“Instead of dealing with insecurity, we are taking actions that will further heighten insecurity because as inflation goes up and more people are plunged into poverty, there will be more conflict in our society,” he said.

In its reaction, the Trade Union Congress (TUC) in a statement signed by its president, Mr. Quadri Olaleye and secretary-general, Mr. Musa-Lawal Ozigi, said no government described the development as a “rape.”

“They have developed a thick skin that our pleas and cries no longer mean anything to them. No government has raped this country like the present one; ironically it has enjoyed our understanding the most.

“They beat us and when we cry, they send security operatives after us or force us to pay a fine of N5 million for ‘hate speech.’ Our patience has run out.

“It is difficult to cope in this circumstance. Do we still wonder why unemployment and insecurity have increased? This is disgustingly shameful,” they said.

However, the minister of state for petroleum resources, Mr.Timipre Sylva, said told Nigerian who are already burdened with all forms of taxes that he increase was a done deal.

He said at a press conference in Abuja that the federal government is currently not in a position, financially, to pay subsidy, as the COVID-19 pandemic has impact negatively on the country’s finances.

The minister who spoke without any scruple further since the introduction of the deregulation policy in March 2020, the country had saved about N1 trillion.

Sylva noted that the deregulation of the downstream petroleum sector and the removal of subsidy was not a political decision, but had become inevitable, especially with the effect of the COVID-19 pandemic, the low crude oil prices and curtailing of Nigeria’s production output by OPEC which invariably constrain government’s revenue.

Similarly, the Major Oil Marketers Association of Nigeria (MOMAN) said the deregulation of the sale of petrol will be beneficial to Nigeria and Nigerians in the long run.

MOMAN’s chairman, Mr. Tunji Oyebanji said in a statement today that “we are into full deregulation.”

“Unfortunately, this is coming at a time when most of our citizens are struggling with difficulties created within the context of the post COVID-19 economy.

“However, we believe that Nigeria is been presented with a historic opportunity to get it right this time as a country to rebuild our economy for the benefit of all Nigerians.

“We welcome government’s action in allowing the market to determine prices as we believe it will prevent the return of subsidies while allowing operators the opportunity to recover their costs.”

“We all must remember the country is broke and can no longer afford subsidy. There is no provision for it in the budget. With this, the incentive for smuggling will be reduced.

“More funds will be available to the government for investments in infrastructure, roads, health, education and power, ” he said.

Oyebanji also explained that the deregulation meant that prices would go up and down depending on the market forces.

They went down in April now they will go up as we are entering the European winter season and demand for refined crude goes up.

“Already there are indications of more investments in local refining in Nigeria which will moderate the cost. Fierce competition will also moderate the price. “As you can see, not everyone is selling at the same price. Consistent with global best practices, MOMAN does not dictate prices to its members as this will be anti-competition in a fully deregulated market,” he said

“Already there are indications of more investments in local refining in Nigeria which will moderate the cost. Fierce competition will also moderate the price. “As you can see, not everyone is selling at the same price. Consistent with global best practices, MOMAN does not dictate prices to its members as this will be anti-competition in a fully deregulated market,” he said

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