Immediate Release: 03-14-2021
Fuel Pump Price Hike: Nigerians Deserve Better Than Apology, a Stable Regime Will Do by FENRAD
Foundation for Environmental Rights Advocacy and Development (FENRAD) a Human and Environmental Rights, pro-democracy and pro-poor group, after assessing the toll and impact the arbitrary increase in the pump price of premium motor spirit (PMS for short or petrol as otherwise known) wishes to remind the federal agencies, authorities and government of the day, within whose sphere the petroleum industry and sector falls, that they cannot continue to exploit Nigerian local consumers with indeterminate price regime.
This warning becomes so crucial, FENRAD says, after the temporary ₦212.00 pump price – which had since been adjusted – threw the whole nation and all legitimate economic activities therein into perplexity and panic buying, amid huge losses, likely in the neighbourhood of billions of naira, suffered by indigent Nigerians. FENRAD understands that the federal government, through the Minister of State for Petroleum had since apologised but the Foundation wishes to remind the federal government and its numerous agencies that it is highly undemocratic for one government petroleum agency to say price cap is this while another agency of government – still within same petroleum sector – says price cap is that instead. Do government agencies, FENRAD asks, now work with different price templates?
Heretofore, rumours from grapevine have had it that there was a looming price increase which the Nigerian National Petroleum Corporation (NNPC) flatly debunked claiming to have fuel that can serve the nation for 40 days within its reserve. However contrary to that claim (by NNPC), Nigerians received the greatest shock of the year when from a little over ₦160.00, pump price reached the astronomical height of ₦212.69. Aside showing the height of inconsistencies of government of the day this price fluctuation further questions whether the president exercises bona fide his executive powers as an elected president and self-appointed minister of petroleum.
Worst is, FENRAD says, these are not the best of times for any unreasonable price fluctuation given that Nigerians – under the current adminstration – battle with high utility tariffs over electricity bill (the so-called reflective billing), VAT increase, increased interest charges on lodgements in and withdrawals from deposit money banks and the like. Also given the bearish toll the pandemic took on Nigerian stock market as businesses, mostly of the informal sector and micro medium scale, went under, such price review would, for the most part, mean blue murder.
FENRAD regrets the unpredictability of price template and modulation as occasioned by the inability of successive governments to fix the five refineries within the country. Since the five refineries can only generate a little over 400,000 bpd (four hundred thousand barrels per day) in a country whose daily budgetary benchmark is 2 million bpd or more, exportation and reimportation of the product with charges on landing cost (by Nigerian Port Authority, NPA and Nigerian Maritime Administration and Safety Agency, NIMASA; jetty throughput; freight cost; lightering cost; insurance cost; transportation; finance; etc, etc) paid for by the federal government, usually through the Petroleum Equalisation Management Fund (Board) which manages subsidy regime, it has become unsustainable to maintain the current regime.
Worst, FENRAD laments, is that rather than live up to its campaign promise of reviving the refineries, the Buhari-led government is forking out the whopping sum of ₦100,000,000,000.00 (hundred billion naira) in what it calls ‘intervention fund’ to Dangote Refinery – a multi-million dollar project – which will begin operation by first quarter of 2022 (Q1 2022); an mount the CBN governor, who visited the Lekki refinery, apprised newsmen of in a recent interview. It is not entirely bad that Dangote Refinery gets intervention fund but only wiser that the five below-capacity refineries get monetary intervention more than any private sector since four of them belong to the federal government. Of course, if fixed, the five refineries can supply Nigeria her daily consumption of 540, 000 bpd (2020 December figure). It is true that Dangote Refinery targets over 600,000 bpd with capacity to reduce Nigeria’s export dependence, however, the federal government should begin to put its mouth where its money is.
A lot is not known about Nigerian oil sector. While the federal government lays claims to having removed subsidy, or to having ended the cliquish and cabalistic oligopoly known to be ‘independent marketers’, the same government enthroned what it called ‘underrecovery payment’ with NNPC being the sole marketer through its subsidiary company – Petroleum Product Marketing Company (PPMC). Why then, FENRAD asks, does the minister of state for petroleum try to pull the wool over the eyes of poor Nigerian consumers by claiming that interaction of forces of market determines the price whereas there is no rational pricing than the political?
FENRAD, , wishes to Remind the federal government and its numerous agencies within the downstream, midstream and upstream sectors that time is now for a sharp and robust revisit, review and reconsideration of the Petroleum Industry Bill (PIB) which if harmonised, in the interest of all parties, has the capacity to encourage local and artisanal mining within the federation thereby boosting local content and reducing problems like bunkering and vandalism. FENRAD so speaks bearing in mind that President Buhari had sometime in 2020 approved artisanal mining in goldfields in the North and seeks for same to be done in the South, where the oil-bearing states are located. It has become vital to hold such position, FENRAD argues, given that the recent Petroleum Equalisation Management Fund Board (Equalisation Fund) appointments shortchanged the entire South where only Borno with 13 and Adamawa with 16 members got more than all of the states of the South South with 13 members combinedly.
Having said all this, FENRAD wants the day’s government to respect the ongoing negotiations with the Labour Congress and look inwards so as to devise means of solving price fluctuation problem. This issue of price instability should not be happening at a time when consumption capacity is sharply declining. FENRAD believes that the current regime under the present administration is no longer sustainable. The need for a more efficient and stable regime is now.
Signed. Conrade Nelson Nnanna Nwafor Executive Director Foundation for Environmental Rights Advocacy and Development FENRAD Nigeria
Barr. Olusegun Bamgbose
Head Legal Team