By Stanley Onyeka, Lagos and By Tochukwu Bliss, Abuja
The Nigeria Labour Congress (NLC), yesterday, called for the immediate reversal of the hike in the pump prices of Premium Motor Spirit (PMS), popularly called petrol, by the Nigerian National Petroleum Company (NNPC) Limited.
NNPC increased the price of petrol to N1,030 from N897/litre in Abuja, and to N998/litre from N868/litre in Lagos, following its withdrawal as the sole distributor of petrol from the Dangote Oil Refinery.
The Organised Private Sector (OPS), also joined the call, saying this latest hike would further exacerbate current inflationary pressure on locally manufactured goods.
Pump price increases have become recurring phenomena of the President Bola Tinubu’s administration, as petrol has witnessed many of such hikes from N198/L upon assumption of office on May 29, 2023.
The irony of the increases is such that the more the rise, the more petroleum products, especially petrol, become scarce, leading to arbitrary hikes in the prices of goods and services, including transportation, thereby impoverishing Nigerians the more.
A hegemonic monopoly
But the NLC would have none of this, saying in a statement that: “Even following the logic of market forces, we find it an aberration that a private company (NNPCL) is the one fixing prices and projecting itself as a hegemonic monopoly.”
Describing this latest increment as an aberration, the Congress in its statement, challenged the government “to go to the drawing board and present us with a blueprint for inclusive economic growth and national development instead of this spasmodic ad holism and palliative policy.”
The statement signed by its President, Joe Ajaero, reads further: “It needs no stating the fact that the latest wave of increase has grossly altered the calculations of Nigerians once again at a time they were reluctantly coming to terms with their new realities.
“It will further deepen poverty as production capacities dip, more jobs lost with multidimensional negative effects. In light of this, we urge the government to immediately reverse this rate hike as previous increases did not produce any good results. People only got poorer.
“But more fundamentally, the government should be bold enough to tell Nigerians in advance the destination it wants to take the country.”
Rising cost of production
Condemning the hike, the Director-General, Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, in a statement said: “The second increase in one month will send high costs across the value chain for the manufacturer.
“In terms of the distribution of our products, it means that we are going to pay much higher for it and this will of course impact the prices at which our locally produced items will go.
“Together with the fact that the disposable income of the average Nigerian has dropped, we are likely to witness a further dip in our sales figures.
“For some small and medium scale enterprises that use diesel in their processes, it is going to be an increase in costs.
“Additionally, workers who make trips are likely to request another raise to allow them to transport themselves to work. Since people will spend more on transport, it reduces the money they spend on other goods, whereas we need more purchases to support more production.”
There is always a place for political economy in the interest of the vulnerable segments of society. The Nigerian economy is not ripe for full-blown deregulation and market principles on all fronts.
Out of sync with reality
The Director, Centre for Promotion of Private Enterprise (CPPE), Muda Yusuf, insisted that this latest increase is ill-timed and out of sync with the prevailing difficult economic reality.
Dr Yusuf in his statement argued that “There is always a place for political economy in the interest of the vulnerable segments of society.
“The Nigerian economy is not ripe for full-blown deregulation and market principles on all fronts.”
According to him, policy sequencing would have been a better choice if the Economic Stabilisation Bill, expected to bring relief to the citizens and businesses through its proposed mitigating measures were activated and gained traction before a petrol price hike.
He continued: “What the economy needs at this time are measures to ease the current economic and social challenges; not policies that would aggravate them.
“It is desirable to urgently cut import duties and taxes by a minimum of 25% on all industrial raw materials, 18-seater passenger buses and above and cars of 2,000cc engine capacity and below.”
He also recommended a customs duty exchange rate at a maximum of N1,000/$ to reduce the current prohibitive cost of imports with relevant legislation amended to that effect without prejudice to the fiscal policy measures in the Economic Stabilisation Plan.
For Mr. Yusuf “The government must be ready to trade off some revenue in the current situation. There is a need to seek to achieve the maximisation of the welfare function for citizens and the productivity function for businesses. The government should not be too fixated on revenue maximisation.”
N45m/truck out of members’ reach
Acknowledging that the new pump price is a reflection of the full implementation of the Petroleum Industry Act (PIA) in a deregulated market, the Independent Marketers Association of Nigeria (IPMAN) said the new price would affect its members.
IPMAN spokesperson, Chinedu Ukadike, in a statement, said: “The price increase will definitely affect our members because for our members to take one 45,000 litres of PMS, they will be thinking of about N45million.
“The capital is huge for most of our members. We keep on clamouring for this energy bank; we need banks that can sponsor this thing. We need banks that can give us soft loans in line with the cost of petroleum products so that we can service our stations.”
Given the high bank interest rate, he added that “Independent marketers are really suffering to acquire funds to face the challenges of deregulation,” a development he said required urgent government’s intervention.