The Nation Newspaper

Tag: hike

  • ‘No fuel price hike now’

    ‘No fuel price hike now’

    The Petroleum Products Pricing Regulatory Agency (PPPRA) has dismissed as untrue speculations of planned fuel price increase by the Federal Government.

    According to a statement by the Agency’s spokesman, Lanre Oladele, the Executive Secretary, Abdukadir U. Saidu, said the PPPRA has observed the growing speculation on a purported imminent increase in the pump price of Premium Motor Spirit (PMS) by N5.00 per litre.

    The Agency, he noted, wished to dispel the rumour and assuage the concerns of Nigerians. “As the Agency of government saddled with the responsibility of regulating petroleum products pricing, supply and distribution, we want to assure the Nigerian public that the subsisting pump price cap for PMS remains N145 per litre, across the country and as such, Nigerians should please ignore the speculation on price increase.

    “We again wish to assure all Nigerians that pursuant to its mandate, the PPPRA shall not fail in its efforts geared towards ensuring products availability, and at regulated price, for the benefit of all.”

  • NLNG explains cooking gas price hike

    The Nigeria Liquefied Natural Gas Limited (NLNG) has stated that the high cost of liquefied petroleum gas (LPG), commonly called cooking, was caused by shipping cost, delay of cargo discharges at receiving terminals in Lagos and the fact that its price is based on international price index.

    Its General Manager, External Relations, Kudo Eresia-Eke in a statement, stated that the company noticed recent media reports on LPG price increases in the domestic market and it has become imperative to explain some of the causes of the price increase.

    He said Nigeria LNG’s domestic LPG price is based on an international price index plus 50 per cent of the shipping cost of delivering the product to receiving facilities in Apapa-Lagos.  That price is invoiced in naira at the prevailing official interbank exchange rates, contrary to erroneous assertions made in parts of the media.

    The reality of this is that although LPG is produced and consumed locally, the product, like crude oil, is an internationally traded commodity with an international price benchmark, open to global demand and supply pressures.

  • Fees hike sparks row at Unity College

    Fees hike sparks row at Unity College

    As schools resume next Monday for a new session, the Federal Government College (FGC), Jos, may run into a storm. Parents are spoiling for a showdown with the school for alleged unilateral introduction of new levies and workers are angry over the suspension of their duty tour allowance (DTA), AMINU IDEGU writes:

    Parents and workers are spoiling for a showdown with the management of the Federal Government College (FGC), Jos, the Plateau State capital, ahead of the school’s resumption for a new session on Monday.

    The parents are tackling the Principal, Mrs Assani Dinatus for alleged unilateral introduction of levies. They are demanding a reversal of the charges and her resignation.

    Besides, there are talks of another industrial action by workers who are angry about the suspension of their duty tour allowance (DTA) and other allowances which they were enjoying before Mrs Dinatus assumed duty last year.

    Before the school went on the vacation in July, management wrote parents, informing them of the new fee regime. In some cases, some levies were increased by 100 per cent, in others, new levies were introduced.

    For instance, boarding fee, which was N8,000 is now N15,000; utility fee, rose from N1000 to N3000.  Society/club fee jumped from N250 to N500, sports went from N250 to N500.

    Pupils are also expected to deposit N12,000 for textbooks, and N3,000 for exercise books. Management also introduced a security fee of N1000, and N3,000 for website/e-result. Insurance fee is put at N5000, totalling N32,200 per pupil.

    Parents described the charges as “outrageous” and “exploitative” and registered their grievances against what they termed “300 per cent hike in school fees”.

    A week ago, the parents marched through major streets in Jos and took their grievances to the Plateau State House of Assembly, the Government House and the Palace of the Da Jacob Gyang Buba.

    According to the protesters, they embarked on the march to draw the Federal Government’s attention to their plight before schools resume for a new session next week. The parents’ grouse was contained in a letter signed by Olusegun Adebayo and titled: “Complaint on the hike in school fees and other charges in the Federal Government College Jos”.

    The protesting parents also carried placards with inscriptions such as, “Parents say no to hike in school fees in FGC”; “What is the fate of tomorrow’s leaders?”; “We say no to impunity”; “Parents say no to N12,000 deposit for textbooks”; “PMB save our school from total collapse; and “300 per cent hike in school fees of Unity Schools unacceptable”.

    To management, the measure is a step to raise funding via internally generated revenue (IGR), in accordance with the government’s directive to Unity Schools to seek ways of sourcing for additional funds to run their affairs.

    About 18months ago, parents passed a vote of no confidence on Dinatus’ predecessor Muhammed Kudu Manko, accusing him of high handedness, corruption and keeping them in the dark about the true state of the school.

    Mrs Dinatus, who had a hand in Manko’s transfer is facing what her perdecessor faced.

    “She was one of the parents at that time, but at the same time she was an Assistant Director in the Federal Ministry of Education,” noted a parent, Mr Clarus Mathew.

    He continued: “She joined other parents in kicking out the last principal. When she was posted as the principal last year, we, parents, were happy since she was part of the struggle, but we never knew she would do worse; that is why we are most disappointed as parents, and we are ready to chase her away just as we did to her predecessor.”

    Another parent, Mr Uchena Okoye, who has two children in the school, said: “This is supposed to be a Federal Government College, but the principal is running it like her private school. When she came, she refused to work with the Parent Teacher Association (PTA) executive. She connived with some parents to form another parallel PTA.

    The Nation investigation revealed that teachers and other workers in the school have not been working in concert since Mrs Dinatus mounted the saddle last year.

    A worker, Mr Simeon Awolabi, told our reporter that the morale of many workers is low.

    He said: “Most teachers and non-teaching staff have lost interest since this woman came. The school is now in darkness because the woman refused to make use of the standby power generator. As soon as PHCN takes power, the whole school is in darkness, including staff quarters.”

    A teacher, who pleaded not to be  named said they were also victims of the fee increase.

    “We, the staff, are not also happy with the new charges because our children are also pupils in the school; that means we will all suffer the increase, hence we are in support of the protest by parents.”

    The teacher continued: “This principal is a unionist; she is the treasurer of the Association of Senior Civil Servants of Nigeria (ASCN); so she prefers to work with the school union which is made up virtually junior staff. She refused to work with directors and senior staff, and that is part of her problem. She takes unilateral decisions and does not consult any director in most of the management’s decision.”

    Investigation revealed that parents are working at cross purpose. Shortly before Mrs Dinatus came on board, the PTA had been dissolved for alleged corruption and a caretaker committee constituted. The PTA executive challenged its dissolution in court. The caretaker committee has been in place for over a year.  This development  may have given management the impetus to introduce the charges.

    Contacted on phone Mrs Dinatus denied knowledge of the protest. “I’m not aware of any protest,” she told our reporter and hung up.

    A director in the school, who pleaded not to be mentioned, defended Mrs Dinatus.

    According to the source, Unity Schools nationwide were cash strapped, and FGC Jos was no exception. The new measure by FGC Jos was a means of jacking up the school’s internally generated revenue, the source explained.

    “Look, my friend,” said the source, “the principal appears too weak to handle intricate internal problems most of which she inherited.

    “Like most of the increase they (parents) are talking about, the decision to increase school fees from N7,000 to N15,000 was taken by all principals of Unity Schools and the Federal Ministry of Education. She did not initiate that one on her own, it was a national thing. Then the other charges the parents are complainings about are just a way to look inward to generate funds because it is obvious the government has no money to run the school. The government has advised various schools to look inwards and generate funds, and that is what she is doing.”

    The director continued: “Now the major reason she did not carry parents along was because she inherited an already factionalised PTA. There was a substantive PTA, which tenure had expired. There is also a caretaker committee that has also remained for over one year now. So, there is virtually no way she could work with parents given these inherent problems.

    “As for me, I’m not blaming the principal. I’m rather blaming the Federal Ministry of Education.  I’m  faulting the PTA national body for failing to solve the problem within the Jos chapter for over a year. This principal needs an organised body of parents to work with for the progress of the school. Again, if the Federal Government is providing necessary funds to run the school, the principal has no business introducing new charges.”

     

  • Inter-state transporters plan 70 per cent fare hike

    Private transport companies have said they may have to increase fares by as much as 70 per cent to stay in business.

    This, they said, is due to the economic challenges and poor infrastructure.

    The transporters disclosed this at a stakeholders’ meeting in Lagos, put together by the Association of Private Transport Companies of Nigeria (APTCON).

    They lamented that high cost of maintaining their fleet and poor state of roads among other challenges, have greatly increased their cost of doing business and are threatening their ability to stay afloat.

    The transporters agreed that to survive,  transport fares increase by 70 per cent is inevitable, beginning from the end of third quarter, if no immediate help or support comes from the government and its agencies”.

    A communiqué at the end of their meeting noted that: “the road transport sector has, over the years, suffered severe neglect with poor attention paid by successive governments to the development of appropriate infrastructure.

    “That the absence of decent infrastructure has been a major setback for efficient delivery of service and value in the road transport sector.

    “That, being in the throes of economic recession, road transport operators have seen their little margins completely wiped away by inflation, rising cost of funds, double taxation, unstable value of the naira as well as unnecessary harassments and extortion by security operatives.

    “That the prostrate state of the automotive industry has made importation of passenger buses not only prohibitive, but unsustainable.

    “That, in the face of poor Return-on-Investment (ROI), the road transport business is in danger of imminent collapse with attendant job losses and damaging impact on the economy.”

    The group urged the Federal Government to immediately intervene by way of a bailout to cushion the harsh business climate and return the industry to sustainability.

  • Nigerians decry bread price hike

    The recent increase in bread price has drawn the ire of some Nigerians. Those who spoke to The Nation Shopping said before the hike, they ate bread at least four times  weekly because it was cheap.

    Mr. Akinya Oluwaseyi said he no longer buys three loaves of bread as he used to do owing to the hike in price. Mrs. Shukurat Babajide said has reverted to eating more rice because “rice can sustain one better than bread”.

    According to Mrs Babajide, notwithstanding that her family enjoys eating bread, its quality and size, has reduced drastically- a factor that now accounts for low consumption of the commodity.

    A distributor of Oldskool and Tee bread, who identified herself as Mrs. Keji, said until about a month ago, she used to buy a size of loaf at a distributor rate of N75, and resell to retailers at N85, who, in turn, sell to consumers at N100. This, she said, has changed as she buys from the bakery at N85, sell to retailers at N95, and the retailer on the other hand at between N120 and N150.

    The Nation Shopping investigation revealed that, indeed, not only has bread price been increased,  the quantity and quality have reduced. A sale representative of Harvest Bread, Mr. Odulami Olaonipekun, confirmed that several bread brands have increased their prices while the few ones that still maintain their previous prices have either reduced the weight or quality of the bread.

    He explained that going by the prevailing skyrocketing market prices of  bread ingredients, such as sugar, butter, yeast, preservatives, vegetable oil, flavors, no bakery or baker can break even, much more make profit without increasing bread price.

    “We used to buy a keg of vegetable oil for N6,500, but now, we are buying the same keg for between  N10,500 and N11,000. So you see that it is not easy to continue selling at the same old price,” Olaonipekun explained.

    Besides, he blamed the sudden increase in the cost of buying diesel and petrol, including the astronomical increase in electricity tariff as part of the reason for the price hike in bread.

    “The diesel I used to buy for N125 per litre suddenly changed to N195 without any genuine reason. All those things contribute to the increment in price because I don’t know how we can survive if we do not increase price, that means we will not be able to pay our workers’ salaries,” Odulami added.

    With the increased price comes a fall in demand and sales of the commodity. Another retailer, Mrs. Faith Fashola, said the new price has led to a drastic fall in her sales.

    Despite claims of high prices of bread ingredients, some bakeries maintain that they have not increased their bread price, but have rather reduced the weight of their product. For instance, a supervisor with Adura Agba Bakery, Mushin, Lagos, Mr. Kabiru Akeem, said the prices which they used to sell still remains the same as they are still building the name and would want to remain in the market as there are many brands to compete with.

    “We still sell at the previous price, not because the economic situation is not affecting us but because we are still building the name; but the increase in prices of everything has made us to reduce the weight of the bread,” Kabiru said.

    With bakers determined to remain in business, and those involved in the supply chain of bread determined to make profit, the heat has been passed to the final consumer.

    However, stakeholders in the industry are worried that going by the harsh economic situation, and the increasing level of consumer behavioural change, it may not be long before the bread industry collapses, leaving in its wake an addition to the country’s army of unemployed Nigerians.

  • No tariff hike, says NERC

    No tariff hike, says NERC

    The Nigerian Electricity Regulatory Commission (NERC) yesterday said it had not receive any request from distribution companies (DisCos) for a 100 per cent tariff hike.

    A statement endorsed by its Head, Media Unit, Michael Faloseyi, explained that the Nigerian Electricity Supply Industry (NESI) said it was not contemplating any tariff increase as none of the industry operators is pressing for 100 per cent increase in electricity tariff.

    This clarification, according to the statement was due to a media report (not The Nation) that created the impression that NERC was considering applications from DisCos requesting for 100 per cent increase in electricity tariff.

    The statement reads: “Contrary to this wild and speculative media report, NERC has not received any request for 100 per cent increase in tariff from any electricity industry operator as most of them are at this moment pre-occupied with the challenges of improvement in service delivery imposed on them by the existing tariff regime.

    “The Commission as well as the industry is responsible enough to appreciate the state of the economy, level of power generation, how Nigerians are coping and would, therefore, not make any decision that could further aggravate the challenges faced by the power sector and the economy.

    “Critical stakeholders in the economy are further advised not to be quick in joining the fray by reacting to baseless media speculation thereby lending credence to rumours and wild imaginations.”

  • With fuel price hike, food prices go haywire

    With fuel price hike, food prices go haywire

    In response to the 69 per cent hike in fuel price, the prices  of food and the other commodities have risen. TONIA ’DIYAN and TAIWO ADEYANJU report. 

    It started like a rumour penultimate Wednesday afternoon, and by the close of work that day, Nigerians were faced with the stark reality that fuel price had been increased by about 69 per cent. The Federal Government increased the pump price of premium motor spirit (PMS), otherwise known as petrol, to N145.

    Characteristic of every PMS price increase, the food stuff segment has responded to the increase. Across the various markets, food prices have skyrocketed, making survival  more tasking.

    According to the Secretary of Tomatoes Sellers Association, Mile 12 branch, Lagos, Alhaji Biliya Adam, the new fuel price has affected the supply and transportation of tomatoes from the North.

    The Secretary of Daleko Market, Mushin, Lagos, Mr. Biola Owolabi, said the hike in  prices  affected everyone including retailers, wholesalers and manufacturers.

    Mrs. Modinat Badmus, a trader at the Iporin Market in Surulere, spoke of a low turnout of shoppers as the prices she usually bought her goods had increased. This, she said, affected the retail price.

    She said prices of beverages, such as milk, sugar and others, had increased at the market where she buys them.

    “A dozen of peak milk we used to buy for N450 now sells for N480, even five pieces of sugar we used to purchase for N250 is now N275,’’ she said.

    A trader, who at the Sabo Market in Sagamu, Ogun State, Miss. Deola Ajayi, said the removal of fuel subsidy had affected traders as the prices of items they buy from producers had increased.

    Ajayi said many shoppers had reduced their list, saying staple items such as 10kg of  Semolina has increased from N1,800 to N2,800, a bag of sugar which used to sell for N7,000 to N10,000, among others.

    The increase in price is not only applicable to staple items as a shopper, Mrs Omotayo Babajide, who bought local clothing material in large quantity for a ceremony, at the Idumota market on Lagos Island, said the trader she bought the same item from last week had increased it by N400. She said the trader claimed  that the price was increased by the manufacturer. This, she said, left her with no choice than to hike the retail prices of her items to cover cost and make a small profit margin.

    The price increase has also left a sour taste in the mouth of many traders. For instance, Mr. Abdulwahab Abdulkabeer, who deals in men’s wears at the Idumota Market, complained of low patronage and turn out of buyers.

    Also, at Yaba Market, Alhaja Oluwayomi Owolabi disclosed that traders have been experiencing low turnout of shoppers since the beginning of this year. For traders, who display their wares for sale till late night, the challenge of illuminating their stall is a worry for them, considering the cost of fueling their generators which is now seen as a luxury.

    She, however, urged the government to make the product available for the masses.

    Online shopping platforms are also not left out. For shoppers on the  platforms, it is double losses for them. First, they have to pay for the increase in commodity price and pay more for delivery services.

    Nosa Idehen, Founder, WesternMall Nigeria Limited, an online auction platform that deals with direct sales, said the main challenge for his kind of business was delivering of goods purchased. His words: “As expected the tariff involved in delivering to customers will increase. Because we always find ways of making shopping easier and cheaper we intend to use different drop points around Nigeria so that customers will be able to pick up their items at the closest drop off point saving cost.”

    SPAR Nigeria’s spokesperson, John Goldsmith, also agreed that the new fuel price is likely to affect The Hypermarket business and its numerous customers.

    His words: “SPAR Hypermarket stores are part of the community and the whole eco-system of the country and hence the impact of the strike on SPAR store will be same as other business establishment. Raising fuel prices definitely impact the operation of the stores in both short and long run. As a part of the business community, we aspire for stable business conditions which enables concrete decision making and helps align actions for enhancing shopper experiences.”

    Although he said there has not been any sign of panic buying across its stores, the situation, he explained, may induce temporary preponement of purchase and would never boost sales in a long run.

    Goldsmith explained that in the given economic scenario, the cost of inflation not only affects price of the products, but also the business operating cost.

    For online retail store Gidimall boss, Osamede Evbakhavbokun, the new fuel price has affected his business and in actual fact it is still affecting it. The price for all products has increased and as such reduced sales as customers and client are being cautious, taking their time to see what will happen in the coming weeks before they can make any purchase.

    “Yes, labour has advised Nigerians to stockpile their homes with food, though we are not into foodstuffs and perishable goods but even at that, the foodstuffs is actually too expensive to stock when a ball of tomato is about N150.00,” he said.

    Once there is an increase in price of products, it takes a little while before customers accept the change in price and it is eminent as the fuel price has increased the cost of all products.

  • Fuel price hike: Why I support Fed Govt, by Oshiomhole

    Fuel price hike: Why I support Fed Govt, by Oshiomhole

    Edo State Governor Adams Oshiomhole has explained why he stands with the Federal Government on the new price of petrol.

    According to him, it doesn’t make economic sense for the government to spend more than half its earnings just on fuel subsidy to the detriment of other development programmes.

    He spoke at a special thanksgiving service organised  by Apostle Charles Osazuwa, Senior Pastor and founder of Rock of Ages Christian Assembly International (RACAi), Benin City, to round off a 7-day programme of the church yesterday.,

    Oshiomhole said the former President Goodluck Jonathan spent as much as N1.2 trillion on fuel subsidy.

    He said: “l have listened to our chairman, Chief John Odigie-Oyegun, and he reminded us that the Hon. Minister of Petroleum, Dr. Ibe Kachikwu, has been under fire. I believe the fire will continue for some time. In spite of all that he is going through, the Minister recognized that we can’t be too busy to come to the church to ask God to help us to do the job. After all, the Bible says that the unless the Lord builds the house, the labourer labours in vain.”

    He said: “The fire that he is going through, the end of it will translate to prosperity for our people. Leaders must see ahead of their followers, and when followers can’t see what leader is seeing, with time and consistency, the followers will see the benefits of the decisions the leader has taken.

    “As many of you might have known, this is not my first time in the struggle against pump price increase. I have fought it over and over again, and at a point, God used us to shut down the country just to make a point to the then government in power, but the truth is that the fundamentals have changed.

    Under President Olusegun Obasanjo, we were talking of N20 billion for subsidy. And Obasanjo would ask me, Comrade, N20 billion can build XYZ road. I think the last one was about N40 to N45 billion a year for subsidy.

    “However, the last government under President Goodluck Jonathan quadrupled the number to N1.2 trillion. When your total earning is about N2 trillion and you spend more than half for petrol, how much will you use for your house? How much money will you use for clothing of your children? How much will you use to send your children to school?

    “Government must make investments in research, in education, in technology. If we spend all our money or half of it on subsidy, we will drink petrol without vehicles for us to ride in. It simply doesn’t make sense anymore.

    “The life of a nation is not different from the life of a human being. When you are traveling on a road which you believe will take you to a destination, sixteen years down the road, it appears to be getting longer and longer, only a fool will continue to travel on that road. From the way it is, this is the time to stop, look back and see other options that are available. I believe that is what this Minister of Petroleum and President  Muhammadu Buhari have done. I give my full support.”

    He added: “When a nation and a people could not for good reason trust the leadership, even when the leadership asks you to make a sacrifice, the first question you ask is, if I make the sacrifice, what about you? Obviously, for a government that was sharing money for security services to party leaders, that government didn’t have the moral standing to call on Nigerians to make sacrifices.

    “So, I think it was that thing that was missing, having a president that cares, a President that is not corrupt, a President that commands respect within the country and outside the country. When he asks you, change your ways of life, look at my own lifestyle, let us restart, we have all sinned in the past, let us repent so that we might not sin again, I think it makes sense to listen.

    “There will be sacrifice, so, no pain, no gain. I believe this is the time to accept a lot of pains, so that once free, the gains will come. I know under President Buhari the gains will come. I know that this time will come and go and Nigeria will maintain its progress.”

    Also speaking, Minister of State for Petroleum Dr. Ibe Kachukwu said the Buhari administration would change the country, explaining that things could not continue the way they had been.

    All Progressives Congress (APC) National Chairman Chief John Odigie-Oyegun noted that the country was going through difficult times, but the people had to change their ways for things to get better.

  • We’re consulted before fuel price hike, says NUPENG chief

    We’re consulted before fuel price hike, says NUPENG chief

    The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) is backing the petrol price increase because of President Muhammadu Buhari’s sincerity in addressing the decadence in the system.

    Speaking with The Nation, NUPENG’s  Southwest Chairman, Tokunbo Korodo said  his union and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN)  were consulted before the increment. But, the unions, he said, had not taken the message to their members before the announcement.

    Korodo said the country was on the verge of economic stagnation, noting that the only way to move the economy forward was to support the government’s action.

    “We met and x-rayed the problem confronting the oil industry at large. We considered the sincerity of the government as it relates to infrastructure and some policies in oil and gas industry.

    “We also put into consideration, the plight of Nigerians. After putting all these forward, the two unions, after a strong deliberation, arrived at a conclusion. We came to support the government and the policy of price modulation. We believe that if the market is opened a little, it will create more room for investment,’’ he said.

    Mr. Korodo said foreign investors with genuine gesture will come in with their products and this will create more jobs for the jobless.

    “The foreign investors will not rely on foreign exchange from government. So, it is a bold step in the right direction,” he said.

    He urged Nigerians to support the price increase, adding that it was a bitter pill the country had to swallow.

    The chairman said  the two unions would not be part of the strike by called by a  faction of the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC).

    “We have informed our members to work and ensure that nobody intimidates them while doing their work,” he said.

  • Is it oil subsidy removal, or price hike?

    Is it oil subsidy removal, or price hike?

    I started writing this article at the weekend, believing that the federal government had, at long last, decided to do away with the long standing and costly oil subsidy. Whatever its attractions, it is no longer financially sustainable. Worse still, it has led to long queues recently at the petrol stations right across the country. I was going to commend President Muhammadu Buhari for his courageous decision to remove the oil subsidy. But half way through the article, my eyes caught some newspaper headlines that the federal government may not have dropped the oil subsidy after all. Both the Minister of State, Petroleum, Dr. Emmanuel Ibe Kachikwu, and the National Chairman of the All Progressives Congress (APC), the ruling party, Chief John Odigie-Oyegun, were simultaneously reported by the media in the course of the week as declaring that the wasteful and fraud ridden oil subsidy had indeed been removed. Not so, says the Vice President, Professor Yemi Osinbajo, who personally issued a press statement that there was no removal of the oil subsidy, but only an oil price hike to reflect the downward trend in the exchange rate of the naira. This is as a result of the falling dollar reserves and increasing pressure on the naira exchange rate. Demand for it is long, but supply is short. The independent marketers are now obliged to source their foreign exchange needs from the secondary market at a premium.

    Obviously, there is some confusion and contradiction in senior official circles over this grave matter, with the ‘realists’ in the government urging President Buhari to remove the so-called oil subsidy once and for all, and the ‘romantics’ insisting on maintaining some form of oil subsidy, or the other. The government is being pulled in different directions on the issue by its top economic advisers. But I prefer to believe the Vice President on this matter as he heads the economic team of the government, of which neither Kachikwu, nor Oyegun, are members. He is in a better position to know exactly whether or not the federal government has finally taken a decision to bite the painful economic bullet by removing the oil subsidy once and for all. President Buhari has not been categorical about this. But then, if the oil subsidy had indeed been finally removed, there would have been no need for the federal government to fix the new price of N145 per litre for oil sales. In a fully deregulated and free market, prices are determined by market forces. Fixing the price of oil will seem to suggest that there is still some official subsidy on oil imports and sales. But then there does not appear to be any provision for oil subsidy in this year’s budget. Or is the price of N145 per litre merely a guide which the importers may, or may not, comply with? Either way, the public is entitled to know whether the subsidy stays, or not. Full deregulation, which is what a removal of the oil subsidy implies, means that market forces will determine the pump price of petroleum, and that the government will have little or nothing to do with price fixing, except in a regulatory sense.

    If this is the case, that the oil subsidy stays, I think it is a pity that the Buhari government has again lost the opportunity to bring to an end the sordid state of affairs in our oil sector by not fully deregulating it. It should abandon the oil subsidy in response to compelling financial and economic considerations in our country. Ex-President Goodluck Jonathan made the same mistake in 2012 when, in the face of some domestic opposition, he abandoned his plan to end the oil subsidy. Had he done so then, it would by now have saved the nation about N6 trillion, about the size of this year’s federal budget. In fact, this time, the reaction of the public to the news that the oil subsidy was being removed was overwhelmingly favourable, despite the pains involved. Even oil workers, including NUPENG and PENGASAN, agreed that it was time for the oil subsidy to go. This positive response to the media reports that the oil subsidy was being removed cut across all sections of our economy, including the industrial sector and independent marketers. The reason is that the scarcity of oil supplies in the market was beginning to hurt the economy badly. Consumers were already being forced to pay up to N150 per litre, or more, for oil in the parallel market. Better to have the oil at a higher price and keep business going than close it down because of oil scarcity. It is a function of economic survival. No matter how acute the pain is, it is still far better than outright death. Businesses were beginning to close down right across the country because there was no fuel to run them. The NLC and the TUC should reconsider their plans to go on strike on this matter. They should think more carefully about embarking on a strike for which there is little public support. This is not to say that their anger about the awful mismanagement of the economy is not justified. But a general strike now will harm our country even more. It will lead to more job losses, as employers will be forced to shut down their businesses.

    It was never going to be an easy decision for the federal government to abandon the oil subsidy. When he came to power last year, President Buhari was not keen at all to increase the pump price of oil. A senior adviser of the government with whom I brought up the matter told me bluntly that President Buhari was totally against dropping the oil subsidy. He rejected all advice that he should do so. For him, the removal of the long standing oil subsidy was both an emotional and sentimental issue. He believed that doing so would hurt the poor more, in a situation of mass poverty. But as the IMF has pointed out, only seven per cent of the poorest 20 per cent in our country derive any benefit from the existing oil subsidy. In fact, President Buhari first tried the option of giving the NNPC, which accounts for some 50 per cent of total oil imports, a monopoly on oil imports to reduce the vast corruption in the sector. But this did not work out as planned, due partly to the fabled inefficiency of the NNPC, its abject lack of the needed logistics and infrastructure, and the determination of the oil majors and independent marketer not to offer the NNPC their cooperation. This led to a supply gap and the long queues in the filling stations.

    The NNPC had to admit that it could not perform as expected without the support of the big oil marketers. This was what persuaded President Buhari to bring the independent oil marketers back. The alternative option, a price hike, is indeed courageous as it could have political costs. In the short run, it could make the government unpopular. .

    Yes, the full removal of the oil subsidy will definitely hurt the poor, at least in the short term, as it will increase the cost of living, and this will worsen the prevailing mass poverty in our country.  But the government’s options on subsidy for oil imports were limited. This subsidy accounts for over 20 per cent of the entire federal government budget. It was clear that it could no longer be sustained with falling oil revenues. Savings from the removal of the oil subsidy will be substantial and will fill some of the gaps in our huge budget deficits. More financial resources will be released to meet our huge infrastructure deficits and more jobs will be created as the economy adjusts to a deregulated oil sector.

    The oil subsidy was first introduced at a time when there was a surge in oil revenues. This surge has not been consistent leading to volatility in oil revenues and a heavy and unsustainable burden on the finances of the federal government. Subsidies can in the long run only be met by budgetary surpluses, not deficits. This year, the federal government will be looking to borrowing internally and externally some N2 trillion to balance its budget. Half of this borrowing is expected to be from external sources. But it is unlikely that it can successfully tap external sources for this huge borrowing, not for investment, but for budgetary support. If the subsidy is dropped, the government will be able to save nearly N1.5 trillion, or more, this year. This will reduce its huge budgetary deficits and the need to borrow abroad by nearly half. In fact, with more prudent management of its finances, including the introduction of practical measures to reduce the cost of governance, the federal government can easily balance its budget next year. Oil prices are beginning to rise again and this trend will, if sustained, lead to higher oil revenues. But this favourable trend should not be frittered away again on the wasteful oil subsidy.

    In fact, the federal government should avail itself of this opportunity to undertake a comprehensive review of its entire subsidy programme and strategy. As it is now, it is totally confusing, inconsistent and ad hoc. It must be based on clearer, more coherent and more consistent principles and objectives. That is not the case now. The focus and target of any future financial bailouts and subsidies should be more on production and less on consumption. Financial subsidies on consumption cannot be sustained when the national revenue and economic growth rate are both declining. This year, our growth rate will fall from six per cent to less than three per cent. The oil subsidy is a subsidy on consumption, not production. And there is really no evidence to support the view that it promotes economic growth in our country.

    For most of the time, oil was being sold to the public at a price exceeding the subsidised price. In fact, as we have seen in recent years from the scandals in the oil industry, the so-called oil  subsidy was largely a mirage, a big scam from which the oil barons and importers made scandalously high profits. Next to the huge scam in defence expenditures, most of which as we now know, actually ended up in private pockets, the biggest source of public corruption in our country is in the oil sector, where the fall in global oil prices are not reflected in local prices of imported fuel, and where some fictitious oil importers are paid for oil that was not actually imported. A deregulated oil sector will end all that.

    Now is the right time to address the problem squarely. President Buhari should go the whole hog now by ending the wasteful oil subsidy. The advantages in the long run should make the short term costs and pains more bearable.