A return to the corruption-sodden subsidy on petroleum products is frightening
Are plans afoot to surreptitiously reintroduce the iniquitous fuel subsidy regime? This is a question urgently begging for answer from the Federal Government and its relevant agencies. Experts and public analysts have suggested that the rise in price of crude oil in the open market from which Nigeria is benefitting at the moment, and the unimpeded depreciation of the Naira against the major currencies tend to suggest that some moves may soon be made to effect changes in the fixed price of Premium Motor Spirit (PMS), a frightening prospect, and, in the alternative, a reintroduction of subsidy that was so abused by independent marketers under the Jonathan administration.
We note that the Nigerian National Petroleum Corporation (NNPC) has denied any imminent increase in the price of petrol. But, we equally note that the corporation said nothing about the return of subsidy. We call on the Minister of State for Petroleum Resources who is also the chairman of the NNPC, Dr. Ibe Kachikwu, to make full disclosure. It is not enough to declare that the country has in stock products that could last 38 days.
Simple economic calculation suggests that a lot has changed in the market since the current price regime was fixed in May 2016. At the time, crude sold for below $45 per barrel, while government explained that it based the new price on an exchange ratio of N285 to the dollar. Today, the dollar is officially pegged at N305 and the price of crude oil has climbed to $55. The immediate consequence of the development is that the independent marketers have withdrawn their participation. The NNPC, therefore, is now the sole importer of the products. On previous occasions, the arrangement had led to shortfalls in the market.
It is unhelpful that government seems to have ignored the outcry of the marketers that its unwillingness or inability to meet its commitment to them in terms of money already expended in importing the product is crippling their business.
Government should realise that there are two sides to every mathematical equation. The fact that the country’s foreign reserve is receiving a boost owing to favourable market conditions suggests that the lid on price may have to be removed. The only antidote to this is to get the local refineries working optimally. We therefore call on the minister to make full disclosure on the state of the refineries and what has become of the plan to co-locate private refineries within their premises.
Nigerians have suffered a lot and had looked forward to better life when President Muhammadu Buhari came into office in May 2015. However, pleading unanticipated economic downward spiral, the president and his team said things would slowly improve. Nigerians are crying over inflation, unemployment and socio-political instability.
Ahead of a possible re-jig of the Federal Executive Council, we call on the president to take another look at his economic team. We agree with those who have pointed out that there are no hard–nosed economists in the team. Many of those handling and superintending key economic institutions are lawyers or accountants. This should change in the months ahead as we approach the mid-term mark of the administration. Nigerians would appreciate, too, timelines for key promises of the government. Following a very slow take-off, the government is yet to gain full momentum. There is no time to waste.
One sector that is considered key to any recovery plan is the petroleum sector, both the upstream and the downstream. This is no time to play games. We note that in the same way that the officials are insisting now, they had given the people fake assurance in May last year, only to suddenly spring a new price regime. Nigerians have shown understanding and would be willing to make sacrifices if only they are fully briefed and shown a credible economic plan, complete with timelines and appropriate cushion. Their resilience, however, should not be taken for granted.
