Nigeria, amidst the suffering; another petrol price increase!

“The two enemies of the people are criminals and government, so let us tie the second down with the chains of the constitution so the second will not become the legalized version of the first” – Thomas Jefferson

On Wednesday, 11 May 2016, Nigeria's Federal Government announced a 60% increase in the pump price of petrol (premium motor spirit), from N86.50 per litre to N145.00 per litre, purportedly, for the purposes of eliminating subsidies on the product and creating enough room for all-comers to import the product. 

Given the parlous and near comatose state of the Nigerian economy, the widespread nature of unemployment, suffering, disenchantment, deprivation and the consequent hunger-induced violent extremism, this particular increase is arguably the most insensitive, ill-timed, audacious and ill-advised in the history of petroleum products prices increase. Suddenly, as it suits the whims and caprices of government, the logic of reduced international crude oil price translating to reduced petroleum products prices in Nigeria no longer holds. Regrettably, this again shows how successive governments, at all tiers, treat Nigerians with contempt, in flagrant disregard of their electoral promises. 

Government is about improving welfare and providing social benefits for the people and not about profit. Nigerians are currently without electricity, potable water, primary healthcare and security; Nigeria is currently ranked 169 out of 189 nations surveyed on the ease of doing business index, as investors are wary of policy somersaults and inconsistencies. 

Nigerians were still patient and highly hopeful that their government, as promised, will take strategic steps to safeguard the interest of the suffering masses before it would contemplate deregulating the downstream petroleum sector in any form or manner.  Government promised to ramp up local refining capacity and ultimately production; and increase the number of NNPC retail outlets and conclude the planned restructuring of NNPC to make it more productive and efficient. To date, none of these was effected and not minding the fact that petrol impacts the pricing structure of every other commodity in Nigeria, government to the shock of Nigerians went ahead to unilaterally increase its pump price.

Nigerians reserve the right to feel betrayed by the consistent failure of government to deal sincerely with them, and keep promises made. This trend must stop!

The National Association of Seadogs, Pyrates Confraternity is very worried that with the announcement on Wednesday 11th May, 2016 the Federal Government may have abandoned Nigerians to their fate with respect to availability of petroleum products. Government cannot lay claim to deregulation since the market has not been allowed to determine the price of petroleum products. Would the government claim to have deregulated the downstream oil sector or removed oil subsidy and still bear the bridging cost of petroleum products across the country under the Petroleum Equalization Fund (PEF)?
Deregulation entails government ceasing to dictate prices, so the purported removal of subsidy while still fixing pump prices under any guise is hardly deregulation. 
We understand that increase in pump prices of petroleum products is not the same as deregulation, which as an economic concept does not always translate to a price increase. It is, therefore insensitive of government to increase pump price of petrol while Nigerians are still struggling with the increase in electricity tariff; it is unconscionable to increase the pump price of petrol when the workers’ minimum wage remains the same; it is ill-advised to increase the pump price of petrol without effectively engaging the populace.

Nigerians deserve better from their elected leaders and governments.

It is equally worrisome that due to the reported paucity of Foreign Exchange, government may have abdicated by predicating its policy to make petroleum products available to Nigerians on the parallel 'black' market. In an oil producing nation like ours, we firmly believe that our energy and focus should be on revamping and improving our local refining capacity and production rather than on increasing importation of petroleum products.

We however foresee hope should the government decide to retain the N86.50 per litre pump price at its NNPC Mega Station retail outlets as a palliative to the masses, while this policy of mass importation by all-comers is experimented with. However, if government has directed the importers to the parallel 'black' market to source forex to import and sell at N145/litre, should government which sources its own forex from CBN now also 'profiteer'? That will be an unfair and unacceptable trade practice that would surely disrupt the market and product supply in the immediate future.

NAS believes that with prudent management, using crude oil countertrading or ‘swapping’, government would not only ensure steady supply of refined products in the interim but also minimize the predictable corruption that goes on between CBN executives, commercial banks and marketers associated with scarcity of forex.

If the downstream oil sector must be deregulated, government must in addition to the aforementioned put the social safety net structures in place that would help it control and absorb the initial price shocks. Beyond this, it must learn to be open, transparent and sincere in communicating its policies to the people. Governance entails accountability, transparency and citizens’ participation. Government must understand that no policy succeeds without the buy-in of the citizens. A situation where it chooses to remain mute and acts unilaterally in policy formulation and implementation is at best disruptive. 

The goodwill and trust of the Nigerian public may be continually squandered by government if it persists in not acting in reciprocity by providing good governance. The social contract between a people and its government remains clear and must subsist.

Finally, government needs to quickly review this policy and reassure Nigerians. It is the least it can afford at this time.

Prince Ifeanyi Onochie

NAS Cap’n
National Association of Seadogs, Pyrates Confraternity
May 13, 2016


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