Fuel price hike: confusion overtakes stakeholders
- Market still not deregulated despite price increase
- State monopoly still rules supplies
- Regulator disabled
Sopuruchi Onwuka
The arbitrary increase of petrol prices announced by the Nigerian National Petroleum Company (NNPC) Limited Wednesday morning is definitely a total deviation from the demand of the industry for deregulation of prices and democratization of supply.
In response, the Nigerian Labour Congress (NLC) which described the inaugural speech of President Bola Tunubu as a serious blunder insists that increase in prices is still a misapplication of deregulation for which the industry has clamoured.
In a statement on Wednesday on adjustment in pump price of PMS, the NNPC Limited told its customers that “we have adjusted our pump prices of PMS across our retail outlets, in line with current market realities.
“As we strive to provide you with the quality service for which we are known, it is pertinent to note that prices will continue to fluctuate to reflect market dynamics.
While assuring adequate supply of petrol, the company which is the sole supplier of the product in the country pointed at prevailing “time of change and growth.”
The Oracle Today reports that the action of the national oil company is arbitrary and did not represent deregulation as demanded by commercial players in the market.
Evidently, NNPC still holds the market captive by retaining its role as sole supplier and sole determiner of prices.
Until prices of petrol are deregulated, the role of fixing prices rests with the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) which draws cost templates from the market as basis for determining retail prices in the country.
The differential between cost templates and allowable margins on the one hand, and the discounted retail prices on the other hand normally sum up the subsidy payable by the government.
However, the role of the NMDPRA in the market has been disabled in the past eight years of former President Muhammadu Buhari when subsidy claims by the NNPC has shot up from N800 billion in 2014 to over N4.0 trillion in 2022.
Industry groups in the market have all disputed the supply figures and subsidy amounts regularly claimed by the NNPC as untenable. Their calls for pan industry data sharing has also been vehemently ignored by the NNPC Limited.
The organized labour including the NLC and the Trade Union Congress (TUC) and all other affiliates have demanded that moribund public sector refineries managed by the NNPC Limited be revamped and restored to function before domestic price deregulation would happen.
The NNPC Limited has since 2015 been running an endless refinery rehabilitation project.
Expectation that President Tinubu would examine issues in the industry to explore the best option out of the crisis was busted during his inaugural address when he declared that “fuel subsidy is gone!”
While condemning President Tinubu for reckless declaration of subsidy removal even without seeking stakeholders’ advice, the organized labour trounced the NNPC Limited for taking advantage of Tinubu’s “unfortunate statement” to hike price of petrol with executive fiat.
The NLC thus rejected the new pump price of petrol introduced by the NNPC Wednesday morning, vowing that Nigerian workers would not accept the new price.
NLC President, Comrade Joe Ajaero, told journalists at Labour House in Abuja, that government cannot be talking about deregulation and be fixing fuel prices at the same time.
Even in the event that the market is yet to deregulate, he argued, fixing of new prices is still not the statutory role of NNPC Limited which is now a commercial player in the market.
He made it clear that no single stakeholder should fix prices for petroleum products in the country, adding that removal of subsidy or fixing of price is not what government could do unilaterally.
The labour leader demanded President Tinubu to immediately direct NNPC to withdraw what he described as its “vexatious pricing template” to allow free flow of discussions by the parties.
He lamented that whereas stakeholders were working to manage “the unilateral and unfortunate announcement by the President to withdraw subsidy on petroleum products,” the NNPC still went ahead to increase the price of the product.
“This is an ambush and runs against the spirit and principles of social dialogue which remains the best platform available for the resolution of all the issues arising out of the petroleum Down-stream sector.
“Government cannot in one breathe be talking about deregulation and at the same time fixing the prices of Petroleum products. This negates the spirit of allowing the operation of the free market unless the government has as usual usurped, captured or become Market forces,” the labour leader said.
Mr accused to government of avoiding all engagements with stakeholders on the issue after a scheduled stakeholders meeting on the matter was called off.
“What the government has done is like holding a gun to the head of Nigerian people.
“As it stands, the federal government has become fixated on their chosen course of action. Would this help this dialogue? It clearly will not,” he warned.
The Oracle Today had earlier reported that despite speculations that the fuel price increase announced by President Bola Tinubu on Monday would take time to be worked out, the NNPC shocked the market on Wednesday morning with instruction on all marketers to adjust retail prices for the premium motor spirit to a range between N488 to N555 per liter.
The instruction which hit marketers early Wednesday cited management approval of the upward review of NNPC PMS pump price table for Mega/Standard/Leased Stations.
The new table of retail prices for different geopolitical zones of the country to be effected by retail managers was instructed to take immediate effect beginning from May 31, 2023.
“Please implement meter change as approved effective today 31st May 2023. Wayne is to attend to all locations as relates to their area of coverage in our network,”
According to the new price schedule, petrol will sell highest in Maidugri and Damaturu at N557 per liter, and N550 per liter in the rest of the Northeast zone.
Birnin Kebbi will buy petrol at N545 to lead prices in Northwest zone. Average price in the North Central zone will be N537 per liter except in Illorin where it will sell for N515 per liter. Consumers in the Southeast will buy at an average of N520 per liter.
Apart from Uyo and Yenegoa where petrol will now sell at N515 per liter, the rest of the Southsouth zone will get the product at N511 per liter.
Consumers in Lagos will buy the product at N488 per liter while the rest of the Southwest zone will get the product at N500 per liter.
It is not clear that the arbitrary price hike is what market groups like Major Oil Marketers Association of Nigeria (MOMAN) and Depot and Petroleum Products Marketers Association of Nigeria (DAPPAMAN) bargained for when they supported President Tinubu’s call for subsidy removal.
The marketers have never minced words on their persistent advocacy for full market deregulation and liberalization. But the prevailing price crisis has offered neither deregulation nor liberalization. State monopoly still holds the market hostage.
