• Tue. Jul 16th, 2024

CISLAC Reacts To NNPC’s Latest Fuel Price Hike

ByHybridNewsNg

Jul 18, 2023

Nigerians continue to bear the brunt of the government’s failure to effectively address the challenges in the oil and gas sector.

They have been deceived and misled by various stakeholders and beneficiaries throughout the value chain.

On June 1st, 2023, Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, claimed that competition among major players in the oil sector would lower the price of petrol, countering the rising trends causing panic in the country.

Similarly, on July 1st, 2023, the Independent Petroleum Marketers Association of Nigeria (IPMAN) denied any plans to increase the pump price of petrol to N700 per litre nationwide.

The recent surge in petrol prices has been attributed to the rise in international crude oil prices, with Brent crude benchmark price surpassing $80 per barrel, as well as the depreciation of the Naira against the Dollar.

However, why aren’t the prices adjusted accordingly when these factors move in the opposite direction?

Out of over 56 companies that applied for import licenses to bring in petrol, only 10 committed to import, and just 3 have actually imported petrol into the country. What are the underlying reasons for this low investor response, which should drive competition and lead to lower petrol prices?

Although the daily consumption of petrol has decreased by 35% since January, indicating reduced demand, it does not imply reduced dependence. Fewer people can afford petrol for transportation, power supply, and other needs, while Small and Medium-sized Enterprises (SMEs) struggle to access affordable energy.

This has significant implications for businesses relying on refined crude products like diesel and petrol. The prices of petrol and diesel have a negative and substantial impact on Nigeria’s manufacturing output.

As of December 2020, there were approximately 39.6 million micro, small, and medium enterprises (MSMEs) in Nigeria, accounting for 96.7% of businesses, 87.9% of employment, and 49.7% of national GDP. These enterprises, totaling about 17.4 million, constitute around 50% of industrial jobs and nearly 90% of activities in the manufacturing sector.

The trade deficit of $20 million recorded in November 2022, resulting from low crude oil export earnings, emphasizes the need to eliminate petrol subsidies, develop local production capacity, and reduce fuel import dependency to achieve a favorable balance of trade.

While it is true that no nation has control over the price of crude oil, several measures can be implemented to mitigate the impact of oil price volatility on the country’s domestic economic productivity.

The current underutilization of Nigeria’s refineries hinders the country’s ability to meet local demand and realize its economic potential.

Nigerians are still waiting for concrete commitments, actions, and timelines regarding the restoration of our four inactive refineries to full operation. In addition, private and modular refineries with refining capacity can strengthen Nigeria’s refining sector, eliminate dependence on imported oil products, and enhance crude export earnings.

The removal of fuel subsidies has had a significant cascading effect on the prices of goods and services. The high fuel prices directly contribute to increased transportation costs, which in turn impact agricultural production and have implications for food security.

The government must demonstrate genuine concern and take urgent measures to mitigate the effects of its decisions, which perpetuate poverty and inequality. This situation further widens the existing income inequality, as low-income individuals and vulnerable segments of society face greater financial strain in meeting their basic food needs.

The government appears to be insensitive to the plight of the increasing number of Nigerians falling into poverty each day due to its harsh policy directions. It has shown little interest in people-centered programs that could help alleviate poverty, reduce economic inequality, and address economic hardship.

At the same time, the government inconsistently applies its “austerity measures” while pursuing unsustainable, unjustifiable, and reckless spending, neglecting the welfare of its citizens.

Nigerians are unaware of the economic blueprint of this government, and this is the consequence of the lack of political accountability under President Bola Tinubu.

From the beginning, he refused to participate in political debates, making it difficult for citizens to track his commitments to socioeconomic and political reforms that can reduce corruption, poverty, unemployment, and improve the well-being of Nigerians.

The government should not take for granted the patience of poor Nigerians who are reluctantly enduring the dire consequences of the over 300% increase in fuel prices due to subsidy removal, hoping for compensatory measures from the government.

It is imperative to build a democracy based on public trust and accountability. Unfortunately, we have a history, practice, and tradition that have fostered the misconception of the government as the master of the public, rather than its servant. This perception must be reversed.

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