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March 23, 2017

New Pump Price – More Misery for the Masses

If there is one thing Nigeria needs to get right, it is the petroleum sector. But why on earth has fixing this so important segment continued to elude successive government?

Everybody knows that whenever the petroleum sector sneezes, Nigeria catches a cold and so do the people. This is why the current hike in the price of petrol, from the official N86.50 per litre to a whopping N145 has not gone down well with the masses, who are already carrying the burden of a 13 per cent inflation, gross unemployment, insecurity and social decay.

Whenever there is an adjustment in fuel price, even the commonest food items go up, including akara, bean cake, “ji ahuruahu” roasted yam and “fufu” cassava.  Our economy has derogatorily been called a “generator economy” and it is a fact. We not only use petrol to drive our cars, we use it to light our homes at night, cool our water and run our businesses, small, medium and large. So the recent increase is not at all flattering, whatever the reason.

Although the Federal Government has promised palliative measures to cushion the pain, it is still no reason to rejoice because we have been on that road before and it was a dead end, indeed.  We remember the Subsidy Reinvestment Programme – SURE-P all the noise made about it and the fact that it achieved little or nothing. One wonders why the Federal Government does not introduce palliative measures ahead of any policy known to have a crushing effect on people.

Some analysts have described the fuel price increase as “insensitive,” while others praised the Buhari regime for taking the bull by the horn and removing the monster called fuel subsidy. There are also those blaming the Federal Government for doing the right thing at the wrong time, that is, putting more burden on people’s shoulders, at this most difficult time. The third group is right; Government could have waited to ease suffering first.

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The Federal Governmennt has given reasons why the increase is necessary and justified. Both Vice President Yemi Osinbajo and Minister of State for Petroleum Ibe Kachikwu have explained that the shortage of foreign exchange is at the heart of the increase.  The nation’s local fuel consumption is entirely imported, with the NNPC exchanging crude oil from its joint venture shares and providing about 50 per cent of local consumption and leaving the remaining 50 per cent for independent marketers, who source their foreign exchange from the Central Bank at the official rate, to provide. Now, the CBN can no longer meet the demand for foreign exchange primarily due to the drop in oil prices.

Both Kachikwu, Osinbajo and the Federal Government expect the new policy to lead to improved supply, competition and eventually push down pump prices. They expect it will encourage investments in refineries and other parts of the downstream sector as well as prevent the high-profile stealing and diversion of petroleum products while setting a stable environment for the downstream sector.

These are clearly great expectations but this is Nigeria, where even the best policies fail due to sabotage, selfishness, and many more.

One question that has continued to bug many minds is: why on earth can’t the government get the refineries functioning? If the refineries are fully in operation, the question of importing of refined petroleum products and the problem of foreign exchange difficulties won’t be there.

While Labour wrestles with the Federal Government on the issue, we want to remind Government that the problem in the petroleum sector cannot be solved by increasing the pump price alone, but by dealing with the massive corruption in the sector, which would mean stepping on some powerful toes.

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But for now, let the palliative measures commence, whatever they are. But let it be known that only correct and sustained implementation of those measures rather than mere media publicity stunt will achieve anything.

People are now so sceptical that do not believe anything Government says. But they is the time for President Buhari and his team to show us that they have what it takes to fix Nigeria. This is an acid test.



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