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Wednesday, February 28, 2024

16% Increase in Pump Price: More Hardship for Nigerians Amid Dwindling Economic Fortune

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Analysts have criticized the move by the Federal government to increase the price of fuel from N123 back to N145 per litre saying it will bring hardship for Nigerians.

Without a doubt the pain and hardship orchestrated by The coronavirus-led downturn in global economic activity has been unprecedented in recent times.

This is the reason why governments all over the world continue to inject all forms of palliatives and bailouts into the economy with a conscious aim targeted at cushioning the effect on its citizens.

Nigeria’s step in this direction is either half measured with little or no impact at all as lamented by many or one that is quickly hijacked by corrupt civil servants or politicians, analysts have said.

The coronavirus-led downturn in global economic activity and recent crude price rise  made the President Mohammadu Buhari’s government change its stance on PMS subsidies earlier in the year, allowing market forces to dictate the retail price of petrol in the country going forward.

For a country like Nigeria that depends hugely on imports, a hefty financial burden continues to take its toll just as the pandemic to a large extent diminishes the purchasing power of its citizens.

With cost of food and transportation increasing astronomically weighing on spending power of citizens, and causing hardship, analysts have also criticized the recent move by government which saw it revert the price of fuel from N123 back to N145 before pandemic impacted the international price of crude oil in the international market.

A move it made to change its stance on PMS subsidies earlier in the year, allowing market forces to dictate the retail price of petrol in the country going forward.

Following this development, Analysts at Vetiva have said, the 16% upward revision in the pump price of PMS implies that for the month of July, we could see a steeper surge in core prices than in previous months, leading to a steeper increase in headline inflation.

This, they say would exert more downward pressure on already weak consumption spending amid a slowdown in economic activity and currency adjustment.

A labour expert and lawyer, Paul Omoijiade: also noted that, this is hardly the best time for an increase.

“They reduced it during the lockdown, only to increase it now that companies are reducing workforce and food prices have gone over the roof. If we continue to have the same set of recycled politicians directing us in this country, we shall continue to encounter such,” he said.

Also, an economist, Kolapo Oluwo, buttressed this point saying while speaking to Money Central, “this is definitely not the best time for this move as reports show already that the price of items such as beans, pepper, palm oil, onions, tomatoes, garri, and potatoes has significantly increased. For instance, a big bag of pepper is currently sold for an average of N16,000, which indicates an increase of 114.3% when compared to the pre-lockdown price of N7,000”.

Likewise, the price of a big bag of onions rose steeply by 31%, as it currently sells for an average of N17,000. We understand that Nigeria operates a deregulated pricing regime in the petroleum downstream sector, we should expect changes in prices as some key variables change.

“This is the essence of a liberalised market. What is critical is to ensure that an effective framework for the unfettered competition is created.

The idea of the PPPRA orchestrating the price movement is not consistent with the ideals of a market-driven framework. In the long run, it is in the interest of the economy to have a liberalised market regime for the downstream oil sector.

This model will also incentivise more investment in domestic refining of petroleum products.” If you ask me we must become transparent, eschew all forms of corruption and fix our refineries and avoid burdening Nigerians with the failure of government,” he said.

The Nigeria Labour Congress (NLC), the umbrella body of Nigerian workers, expressed dissatisfaction with the increase in fuel price, describing it as an exploitation of the people.
NLC President, Comrade Ayuba Wabba, said Nigerians should not be made to suffer from the result of failure of good planning and management.

“This exploitation will not end until we are able to refine crude oil in Nigeria. “We have said it severally and therefore we reject these and I think at this point in time, instead of government giving to the people, like others are doing in other climes, instead they are exploiting and causing untold hardship for Nigerians”.

Already in Lagos and other parts of the country, our correspondent gathered that before the recent increase, there was a 100 percent increase in the cost of transportation. Now that the price of fuel has been increased, transporters are sure to take it even a notch higher.

Accusing the Federal Government of “planning to increase the burden of the people”, Ogunyemi asked: “What stops us from fixing our refineries all these years? Buhari’s administration has been around for five years now, and all they keep telling us each time they tinker with the pump price is that they would use the fund generated from what they saved from subsidy to address the problems of the refineries. But none of the refineries can be said to work up to 50 per cent capacity.”

He added: “We need to buckle up but we know no government will budge unless pressures are brought to bear and I believe at the appropriate time, those who know how to bring that pressure will come up.”

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