Sunday night’s reduction of petrol price from N97 to N87 by the Federal Government has received little kudos but huge knocks from Nigerians.
Besides, filling stations across the country did not heed Minister of Petroleum Resources Mrs. Diezani Alison-Madueke’s directive to effect the new price regime “with immediate effect” from midnight (Sunday).
Majority of them sold at the old price yesterday. Those who did not want to sell at the old rate closed shop.
The Nigeria Labour Congress (NLC) – the umbrella body of workers – hailed the price cut, but insisted that “it is not deep enough”.
The opposition All Progressives Congress (APC) described the price slash as “mere tokenism”, and slammed the government for ripping off Nigerians.
In a statement by its National Publicity Secretary Alhaji Lai Mohammed, the APC accused the Federal Government of “making a show out of deceit” by its so-called fuel price reduction. It said a 10.3 per cent slash in the price of petrol (from N97 to N87) is mere tokenism at a time the price of crude oil has crashed by about 60 per cent.
The party said the pump price of a litre of fuel should not be more than N70, meaning that at N87 per litre, the government is forcing Nigerians to subsidise the “massive corruption” in the oil sector by N17 for every litre of fuel.
‘’When crude oil was selling at 100 dollars per barrel, the landing cost of PMS without subsidy was N125 per litre. Now that the oil price has crashed to about $44 per barrel, landing cost without subsidy is about N65 per litre. The same goes for diesel, which should not sell for more than N90 per litre,’’ it said.
The APC said while governments of countries which are not as economically endowed as Nigeria have reduced the pump price of fuel, Nigeria that is the world’s sixth largest producer of oil is just announcing a price slash that is far below those countries.
‘’Early this year, Zambia slashed the price of petrol by 23 per cent while Tanzania reduced the pump price of the product by 16%. In the US, which until recently was importing crude oil from Nigeria, the price of fuel has fallen for 113 consecutive days as of Jan. 16.
Therefore, the 10.3% price slash in Nigeria is too meagre too late,’’ the party said.
It said the real reasons that the government has delayed reducing the price of imported petroleum products following the crash in crude oil prices are the massive corruption in the oil sector and lack of political will on the part of the leadership.
‘’With Nigeria depending on importation of petroleum products to meet about 90% of its domestic consumption, the country is relying heavily on term contracts entered into with petroleum product trading companies to meet its domestic demand. It is possible that the petroleum products pricing formula embedded in these contracts, which generally run for up to 1-1/2 and in some cases two years, have not anticipated these low prices.
‘’Therefore, unless the government moves to renegotiate the contracts now, it may not reap the full benefits of the decline in petroleum prices. But here is the catch: Since the government and its agents have skimmed off huge ‘commissions’ from the firms with which the term contracts were signed, it could not possibly go back and renegotiate those contracts or go into new forward contracts that will reflect the current reduction in crude oil prices.
‘’It takes a strong-willed, determined and transparent leadership to immediately call in the petroleum products contracts for re-negotiation, as this will represent a huge blow on corruption in the sector since clearly ‘commissions’ would have been paid by petroleum product traders on the existing contracts. This explains the token reduction in fuel price, which the government must have hoped will fool an unsuspecting public, especially a few weeks to elections,’’ the APC said.
The party also wondered why the PDP-led Federal Government had to wait for a widely-publicised call from the APC presidential candidate, Gen. Muhammadu Buhari, and some other concerned Nigerians before doing what the government of other countries in Africa and elsewhere around the world have already done: slash the price of petroleum products commensurate with the fall in crude oil prices.
It called on the PDP federal government to immediately slash the price of petrol to N70 per litre and the prices of diesel and kerosene to nothing more than N90 per litre each way, and stop stealing from Nigerians who have been pauperised by its bad record of governance since 1999.
The APC presidential council, in a statement by its Media Director, Mallam Garba Shehu, said “the Jonathan-led PDP government is beginning to listen to public outcry about bad governance, extortion and exploitation of the Nigerian masses in the oil sector where billions of naira are daily being ripped off the pockets of the common men and women through inaccurate pump prices of petrol, diesel and kerosene, despite the dwindling world market prices of these products.”
He faulted both the decrease ratio of N97 to N87 and the timing of the announcement by the Federal Government as “politically-motivated, ill-timed and too little, too late”.
He added that “the PDP has run out of ideas for the presidential campaign and has resulted to raking straws from inertia ponds. This measure is not different from the President’s belated visit to a few places in the Northeast, a region which has been ravaged and devastated by Boko Haram’s brigandage, a situation to which the number one citizen seemed to be oblivious of until recently.
“The oil price decline is 55% and the cut in the pump price is 11%. The argument is that devaluation which is approximately 10% should be factored in. However, the timing and the inadequate price cut smacks of incompetence, insincerity and desperation.
“The US has witnessed price cuts in excess of 50% from $4.00 to $2.00 which translates into 50c per litre or N60 per litre, including state taxes. How can petrol in the US be 25% cheaper than in Nigeria? It just does not make sense. This is too little too late. The alternative will be to further reduce petrol prices and overhaul the subsidy system, which is a cesspool of fraud, money laundering and imperfect market structures.”
Shehu questioned the motive and justification for a mere N10 cut in fuel price, considering that global price of crude oil per barrel on which the pricing of petroleum products is predicated, has plummeted from $105 to $50.
“How did they calculate the ratio? Aside, if the new price took effect from 18th January, 2015 what happens to the backlog that has existed since December? Will the Minister and her boss give coupons to Nigerians to fill their tanks to make up for the arrears? Or who is benefiting from this windfall?”
“Any attempt by the ruling party to make a political gain out of this natural economic phenomenon of demand and supply would definitely hit the wrong notes with the voters come February 14.”
