Again, time to accelerate the process of local refining
In the latest template released by the Petroleum Products Price Regulatory Agency (PPPRA) last week, the Expected Open Market Price for petrol was given as N92.34 per litre. At the current official price of N86.5 per litre, it comes to an under-recovery and hence subsidy of N5.84 on every litre of the product sold. However, PPPRA’s Acting Executive Secretary Sotonye Iyoyo has stated that “The agency is retaining the retail prices of N86.00 for the NNPC and N86.50 for the other marketing companies. The pump price of household kerosene also remains unchanged from what it was in the last quarter”.
While advising marketers to ensure that there is no price distortion in their respective retail outlets, she says her agency “shall continue to monitor the global oil market performances, and come up, at appropriate time, with reasonable changes consistent with the newly-adopted price modulation principles.”
Coming at a period of unprecedented scarcity during which the price of petrol actually hit the roof, the PPPRA’s statement is no doubt superfluous. The reality of course is that petrol price is anything near the so-called official price: in most places, motorists are forced to buy at N140 per litre with some buying as high as N200 to N250 per litre. As it is, only the PPPRA boss can pretend that there is still any such thing as ‘regulated’ price. In Lagos and perhaps some few retail stations in Abuja where the product still sold for N86.50 per litre, it was more of an exception rather than the rule. For motorists, many of whom have endured the agony of spending otherwise productive man-hours and sometimes days on the queues waiting for fuel to buy, the PPPRA advice obviously means nothing: they would in fact gladly pay any price just to have the products in their tanks.
This is why the implication of the new template released by the PPPRA is somewhat frightening. What it clearly suggests is a return to the era when humongous sums were paid to marketers as subsidy. Given the current circumstances in which the marketers have already collected a sum more than equal to the so-called subsidy upfront in the chaos foisted by the biting scarcity, we are forced to wonder whether it actually makes sense for the government agency to be alluding to any subsidy – except merely for the record – at this time.
In other words, Nigerians have since gone past the sterile debate of the subsidy issue. The reason is simple: if it exists at all, it is probably for motorists in Lagos, Abuja and perhaps a few other state capitals where the Department of Petroleum Resources (DPR) has managed to enforce compliance with the regulated price; certainly not in most parts of the country where marketers have long taken the liberty of selling at prices that suit them. That being the case, there could be no further justification for retaining a measure that robs the treasury of hundreds of billions of naira annually while also denying its intended beneficiaries of its fruits.
Left to choose between the stifling regulations that have proven ineffectual over the course of the last few years, and an atmosphere which guarantees steady flow of fuel at all times, Nigerians would no doubt choose the latter. Better still, they would prefer a situation in which the price of fuel is not indexed to any import price with its cyclic fluctuations – something that only local refining would guarantee. Given that the former is what Nigerians want, that should also be the direction of the Federal Government at this time. To that extent, any deviation from that path should be seen as diversionary.
