In response to the slump in the price of crude oil in the international market, the Federal Government last week slashed the pump price of Premium Motor Spirit (PMS), otherwise known as petrol, from N97 to N87 per litre. The reduction of fuel price by N10, or 10.38 percent, is to be effected by the Petroleum Products Pricing and Regulatory Agency (PPPRA), and Department of Petroleum Resources (DPR).
This reduction is quite in order. It is good that the government has joined other major oil-exporting countries that have reduced the pump price of petrol on account of the drastic fall in the price of crude oil. This is a welcome development that had long been anticipated by Nigerians.
However, a reduction of N10 is not significant, considering the sharp fall in the price of crude, from around $100 per barrel, to about $48. This has given rise to charges that the reduction is tokenist. Certainly, the government could have pegged the pump price of petrol lower, to reflect the new crude price. The reduction of 10.38 percent is said to be one of the lowest among the oil-producing nations that are in a similar situation. Government can still further reduce the pump price to reflect the crash in the price of crude.
All the same, we commend the government for this decision, which will go some way in easing the burden of Nigerians. It is, indeed, a plus for the authorities. However, we do not think the reduction should be limited to the price of petrol alone. The government should consider reducing the price of other petroleum products such as kerosene, diesel and aviation fuel.
It is scandalous that kerosene sells at a far higher cost than petrol in the country. This is more so as the product is hardly available below the price of N120 per litre, while it is supposed to be subsidized by the government, and sold to consumers at the pump price of N50. Government should do something to stem the scarcity and high cost of kerosene.
Since the official reduction of petrol price, not all marketers have complied with the directive. We commend those that have effected the price change and urge those who have not done so to comply immediately. Let them face reality and begin selling petrol at the new rate. Nigerians expect no less from them. Strict implementation of the change in price is very important.
The authorities that have been given the responsibility of effecting compliance with the directive should, therefore, rise up to the challenge.
The slump in the price of crude affords Nigeria yet another opportunity to re-examine the contentious petroleum subsidy issue in the country. We say this bearing in mind that the idea of subsidizing the price of petrol at a time of low price of crude oil is not in order. Again, the continuing high cost of diesel and kerosene at a time when crude oil price has collapsed is paradoxical and unacceptable. Interestingly, N91 billion was allocated to kerosene study in the 2015 budget estimates submitted to the national Assembly.
It will be recalled that President Goodluck Jonathan increased the pump price of petrol from N65 to N97 per litre in 2012 due to high price of crude oil in the global market, but has now marginally reduced it when crude price fell.
Nigeria, since 1973, has had so many fuel price increases, with few marginal reductions, including the current one by Jonathan. In fact, almost every government in Nigeria has made it a point of duty to hike fuel price at one time or the other. Gen. Yakubu Gowon increased fuel price from 6 kobo in 1973 to 8.45 kobo. In 1976, the late Gen. Murtala Muhammed increased it from 8.45 kobo to 9 kobo. Gen. Olusegun Obasanjo in 1978 increased it from 9 kobo to 15.3 kobo. President Shehu Shagari increased it to 20 kobo in 1982. Gen. Ibrahim Babangida increased it several times from 39.5 kobo in 1986 to 70 kobo in 1991. Head of Interim Government, Chief Ernest Shonekan, Gen. Sani Abacha, and Gen. Abdusallami Abubakar all effected fuel price changes that took it to N20 before Obasanjo came back to power in 1999 as president and increased it from N20 in 2000 to N65 in 2007.
Let government organise the oil sector in a way that Nigeria will be less susceptible to volatility in the price of crude oil. We have crude oil in abundance. If we have adequate functional refineries, we will not be tossed to and fro by the vagaries of the world oil market. We will refine our own crude and better keep our petrol pump price on an even keel. Nigerians are, indeed, tired of frequent fuel price hikes and contentious subsidy regimes.
The passage into law of the Petroleum Industry Bill (PIB) should help bring the desired change in the beleaguered oil sector. Let the National Assembly and other relevant stakeholders do the needful to salvage this critical sector of the economy.
