In a bold move to end the corruption-riddled fuel subsidy regime, the Federal Government last week commenced a guided deregulation of the oil industry. Under the new arrangement announced by the Minister of State for Petroleum Resources and Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Emmanuel Ibe Kachikwu, petroleum importation will now be open to all Nigerians and marketers will fix their prices, but no filling station will be allowed to sell the product beyond N145 per litre.
The decision of the government to stop the payment of fuel subsidy, and allow the sale of a litre of petrol at N145 has drawn the ire of the people. The Nigeria Labour Congress (NLC), last Wednesday, called Nigerians out on a strike to protest the increase.
Before the present administration assumed office on May 29, 2015, the price of petrol was N97. The government later reduced it to N86.50 before the recent hike to N145. This latest increase in the price of petrol is one of the steepest in Nigerian history.
The minister explained that government decided to go ahead with the deregulation after wide consultations with major stakeholders in the industry. Any Nigerian entity is now free to import the product, subject to existing quality specifications and other guidelines issued by the regulatory agencies. Such importation will be done using forex obtained from secondary sources.
Hitherto, with the exception of major cities like Lagos and Abuja where petrol was available at the government approved price of N86.50 per litre, the product sold between N120-N150 and above per litre in many other parts of the country. During the recent nationwide scarcity, it was sold for up to N250 per litre in many parts of the country, including Lagos.
The strike called by the Ayuba Wabba-led faction of the NLC to protest the price hike is in its third day today. It has only recorded partial success as compliance with it has not been total. Private sector operators and even public sector workers in many states have not joined the strike. This, however, does not detract from the wisdom of calling the strike to register the grievances of the people on the increase, in spite of the court injunction against it by the National Industrial Court (NIC) and the invocation of “no work, no pay” rule by the government.
The Trade Union Congress (TUC) and the Joe Ajero faction of the NLC boycotted the strike. The inability of labour to speak with one voice on the strike probably contributed to its poor outcome. Workers in Abuja and Lagos largely defied the labour’s instruction and went to work.
It will be recalled that President Goodluck Jonathan administration’s attempt to deregulate petroleum was fiercely resisted by labour and the now ruling All Progressives Congress (APC) in 2012. It is ironical that the arrowheads of the protests against the cancellation of fuel subsidy by the then Jonathan regime are now pleading for public understanding on the matter.
With the way the NLC strike is going, it appears Nigerians have become more understanding of the need to end the problematic subsidy regime. It has, indeed, been a scam which unduly favoured few privileged Nigerians at the expense of the majority of the people. And, with dwindling oil revenue due to the fall in price of crude oil in the international market, and the huge chunk of our national budget that goes into questionable subsidy payments, more Nigerians appear to have resigned themselves to the fact that an end to fuel subsidy has become inevitable.
It is unfortunate that this deregulation has come at a time that Nigerians are already going through difficult times on account of rising inflation, poor electricity generation and unemployment. The government must work harder at reducing inflation, which is already too high at 13.7 percent, and tackle poverty and unemployment. The promised poverty alleviation scheme for the poorest Nigerians should be implemented in earnest while more funds should be committed to public transportation. An increase in the minimum wage will also help the people to cope better with the pains of fuel subsidy removal.
The government has to brace up and forcefully address these challenges. It must also manage the gains of the deregulation in a way that will make life significantly better for Nigerians. Let there be remarkable investments in public infrastructure such as roads, bridges and hospitals. Let our refineries be put back in shape and more built to end our dependence on oil imports. Let the government do whatever is required to provide adequate electricity for the nation.
Good enough, we have witnessed successful deregulation of the telecommunications and gas sectors of the economy. These successes should be replicated in the petroleum sector through effective implementation of the deregulation policy.
Despite the reservations against deregulation of the sector, we firmly believe that it is the right way to go, though it will surely come with some pains. Apart from putting an end to the subsidy scam, it will end the perennial scarcity of the product occasioned by the greed of marketers.
However, the government should carry all Nigerians along on this policy. It should properly explain why it has become inevitable, and provide effective palliatives to cushion its effects. Its implementation should be given a human face. We hope to see a reduction in the pump price of petrol in the months ahead as witnessed in the telecommunications sector.