•Seek end to NNPC’s sole importer status, transparency in pricing system
•‘Government enacting policies to punish Nigerians’
Marketers of Premium Motor Spirit (PMS), otherwise called petrol, yesterday, directed their members to sell the product between N168 and N170 per litre.
This followed an announcement by the Nigerian National Petroleum Corporation (NNPC) increasing the wholesale price of the product from N147 to N155.
Maintaining a steady rise since the Federal Government deregulated the downstream segment of the petroleum industry earlier this year, the price has risen from about N121 in June to N170 this year.
The current development followed a volatile oil price, which yesterday sold about $43 per barrel, although it has remained between $40 and $45 for months. The official exchange rate has also averaged N381 in the past months.
A circular dated November 11 from the Pipelines and Products Marketing Company (PPMC), a subsidiary of the Nigeria National Petroleum Corporation (NNPC), had informed petrol marketers of the changes in wholesale price, otherwise called ex-depot rice.
The letter, with reference number PPMC/C/MKT/003 and signed by Ali Tijani, was approved by the management on November 12, as the price change was detailed to take effect from yesterday.
In what appears to have added confusion to the situation, the NNPC later in the day faulted the circular from PPMC, noting that the correct prices, as could be seen on PPMC’s ‘Customer Express’ platform (online portal for procurement of petroleum products) were Ex-Coastal Price – N128 and Ex-Depot Price (with collection) – N153.17.
Stating that it was aware of a document widely circulating in the media on the increased ex-depot price, a statement by the Group General Manager, Group Public Affairs Division, Dr. Kennie Obateru, advised marketers to make their purchases through the online “Customer Express” platform (PPMCCustomer.Express/login/authenticate) at the recommended prices.
In their reactions, the organised Labour and experts kicked against the increase, saying it was a clear abuse of governance by the present administration, adding that government was enacting policies to impoverish the already over-burdened masses.
They said rather than increase fuel price when Nigerians were still struggling to feed due to the challenges COVID-19 pandemic and the recent #EndSARS protest threw up, the government should come up with measures that would lessen the burden on the masses.
A top official of the Nigeria Labour Congress (NLC), Chris Onyeka, said the increase was a clear abuse of governance and a gang up against the interests of the citizens and indeed the nation, calling on the government to step down the hike for the sake of the already impoverished people of Nigeria.
He said a government that understood its responsibilities to the citizenry would not gleefully announce another round of price hike on a product that is central to the lives of the people, warning that a hike in the price of petrol would further stoke the fire of inflation.
Onyeka said the government was provoking Nigerians and actually tempting them into taking actions that might endanger the polity, especially as they were still trying to overcome the effect of the recent #EndSARS protest, from which government ought to have learnt.
He stressed that this was not the time to continue testing the will of the citizens of Nigeria, noting that all actions of government must be anchored on the needs of the citizens, which is the purpose of governance.
He stated: “Government must shield its citizens from certain burdens and not collude with fat cats to milk its people dry. I do not know what the government is thinking, but I am sure that their thoughts need to be guided properly, because there may be consequences.
“I also think it is grossly insensitive for government, at this time of great distress caused by COVID-19 pandemic, growing poverty, galloping inflation, especially on food prices, to seek another hike in the price of PMS.
“We are surprised that while other nations of the world are at this time extending grants, alleviating hardships on their citizenry, our government is here crafting policies designed as if to punish Nigerians for God knows what.”
Chibuzor Opara, a Lagos-based businessman and car owner, said: “I am not surprised at the sudden increment at the petrol price as this was bound to happen. In a country where the government acts without considering its people, how can this be new?
“Before now, the price was one of the major causes of the increase in the price of essential commodities and transportation in the country and with this sudden news, it will only get worse.
“Government keeps giving us, the people, more reason we should not believe in them. In an economy where the people are finding it difficult to survive, this would only aggravate the situation and people of the lower class would suffer it the most.”
Agboola Rasheed, a transporter, expressed shock at the news of the increment, saying: “Most passengers are complaining already about the cost of transportation without having in mind that it is not our doing.
“The increase in petrol price is the main reason foodstuffs have become so expensive because transporters are steadily increasing fares and people are already tired of our system of operation. The latest increase would only worsen the situation.
“Government keeps making things difficult for us. How do they think we will cope? I end up spending most of the money I make daily on petrol, both at home and in my vehicle and it is becoming frustrating.”
Another transporter, who identified himself only as Usman, said he was not surprised, “considering the season we are in.”
He added: “It is almost Christmas and most times, this is the period of sudden increment. Nothing surprises me in this country. As such, I’m not surprised by the news, but I feel the current situation of the country. The government would have been compassionate and not increase the petrol price.
“This increment would definitely affect those who plan to travel this festive season. Most importantly, this increment would affect the price of food items, causing more hunger and anger among the people, because most traders who transport their goods would be deeply affected,” he said.
Oyeniran Jonathan, a student also said: “The increment is obviously very bad. As a student, I can boldly tell you that it affects me all round. But the basic areas I’m affected most are transportation and feeding. From my lodge to school costs me N150 to and fro but now I will spend between N300 to N400. Only God knows how things will be in school with the latest increase in petrol price.”
On his part, the Director-General of the Nigeria Employers’ Consultative Association (NECA), Dr. Timothy Olawale, said the increase called for transparency in the deregulation process, as it has generated concerns among Nigerians, especially as there was no major increase in the price of crude oil at the global market, rather a decline, which ordinarily should necessitate a downward review in the pump price.
He maintained that the increase in the ex-depot price implied that PMS would now sell for up to N175 per litre, urging total deregulation of the downstream oil sector, with market forces determining the price of PMS.
Olawale said it was imperative for the government to demonstrate a high level of transparency in the deregulation process, noting: “A deregulation system that inspires confidence among Nigerians will go a long way in assuaging the concerns being expressed by Nigerians.
“We implore the government to, as a matter of urgency, fast-track the implementation of all pro-poor policies to cushion the effects of COVID-19 and #EndSARS protest on businesses and the generality of Nigerians.”
He said the expected savings from deregulation should be ploughed into infrastructural development that would quicken economic recovery and elevate millions of Nigerians from the poverty line.
Similarly, an economic expert, Jide Ojo, said the government needed to come out with robust explanation to Nigerians. He noted that it was a very difficult time for the government and the country, saying the issue of deregulation has not sunk into the subconscious of Nigerians.
He stressed that the only way the international crude oil price would not affect the local price was if the country was sufficient in domestic refining of crude oil.
He added: “Let the government come up with a robust mitigating factor to vulnerable groups so that the restiveness that would come from that end would reduce. More private sector participation in the refinement of crude oil is necessary. We need the passage of the Petroleum Industry Bill (PIB) to liberalise the downstream and upstream sectors of the industry. With more players coming into the trade, the competition will beat down the price.”
A lawyer and expert on Labour matter, Paul Omoijiade, said: “The burden on the masses is much and businesses have been on hold since the pandemic. What a responsive government should do at this time is to come up with measures that would lessen the hardship of the people. Not addressing youth unemployment and increasing fuel price is causing more restiveness. The last #EndSARS protest was just a tip of the iceberg. You cannot be increasing prices where income is static.”
The Independent Petroleum Marketers Association of Nigeria (IPMAN) told The Guardian that marketers had been directed to sell the product at N170 per litre. Its Vice President, Abubakar Shettima, said the marketers had no option than to add their margin on the ex-depot and increase the price to N170 per litre.
In line with the monthly templates adopted by the Petroleum Products Pricing Regulatory Agency (PPPRA), consumers had expected that fuel prices would be adjusted for this month to a retail price band of N143-N145/litre, which was the case when oil traded within the same margin in June.
Stakeholders in the industry have, however, started raising concerns over the monopolistic nature of the market, as NNPC remained the key importer, a situation that was earlier projected to fade with the introduction of deregulation.
Some experts also expressed concern over the secrecy clouding the price determination, insisting that regulatory oversight could be disappearing in the industry.
Nigeria had earlier this year announced deregulation of the downstream segment of the industry, as the government suspended a subsidy regime allegedly shrouded in corruption and secrecy. This is coming amid the shutting of refineries across the world due to low demand for fuel as the International Energy Agency (IEA) had said that over 20 million barrels per day crude oil distillation capacity now sits idle.
With the current pandemic, fuel demand crashed worldwide, as EIA said that permanent shutdowns of refinery capacity had reached 1.7 million barrels per day (bpd).
Earlier this month when the crude oil price fell to $37 per barrel, spokesperson of the NNPC, Kennie Obateru, told The Guardian that it could take a while for the reduction in the crude oil price to reflect in the pump price, maintaining that the current product was ordered based on the old price of crude.
He had noted that the corporation would not hesitate to reduce the price as soon as other prevailing factors, including the exchange rate, favour such move, only for a price increase to be announced yesterday.
But Director of the Centre for Petroleum Energy Economics and Law, University of Ibadan, Adeola Adenikinju, said consumers could expect some lags in the adjustments of domestic prices to the two major price drivers – crude oil prices and exchange rates.
He stressed the need for greater transparency in the price determination process in order to foster consumers’ confidence.
PricewaterhouseCoopers’s Associate Director, Energy, Utilities and Resources, Habeeb Jaiyeola, also called for transparency in the pricing system and sensitisation on the downstream sector, while noting that consumers must be aware that the sector operates on a future price.
A mineral/energy resource economist and former president of the Nigerian Association for Energy Economists (NAEE), Wunmi Iledare, said PPMC was a monopoly in the market and also called for transparency and liberalisation of the sector.
A Professor of Economics at Babcock University, Segun Ajibola, equally faulted the lack of a credible template for determining the fair price of petrol in the country, alleging that the market uses a rule of thumb that was not clear to consumers.
Ajibola said: “That explains the anti-cyclical price regime that is coming out now. Solutions to this are Divorce NNPC from the importation of refined products. Playing the role of a regulator and an operator at the same time can only at best create willful distortions in the market. Let the DPR and PPMC wake up and carry out their statutory functions by devising explainable template for fixing the retail price of petrol in the country. By this, transparency and by extension public confidence will be restored in the entire process.”
