Petrol price slash: Buhari and a promise in the air

By Nduka Uzuakpundu
If memory still serves Nigerians very well, they would recall that Muhammadu Buhari, the President of Nigeria, did promise them during his electioneering, in 2014, that he would slash the price of petrol to about N87.00 per litre from N145.00, for which it has sold since the era of the Goodluck Jonathan Administration. Nearly fours years since then, that promise has not been kept. The experience that Nigerian consumers have had is that, while the N145 price of a litre of petrol looks certain to endure, beyond 2019, the Buhari Administration will surely not, for informed political reason, tamper with the cost of the product.
Perhaps, The Buhari administration apologists, like Minister of State for Petroleum Resources, Ibe Kachikwu and Minister of Information, Lai Muhammed, would want it to be credited with the other side of the argument that it has not increased the cost of a liter of petroleum, the fact that it has, for the most part, made petrol available for Nigerian consumers, except for the recent scarcity between November 2017 and January 2018. It was Kachikwu’s position that it would be wrong to frown upon Buhari for having not met his promise on fuel price slash.
He said that, “The promise was well-intentioned, because it was calculated, back in 2013, that the price of fuel could be lower than it was at that time. There has been too much corruption in the industry that the fuel subsidy was seen as a wrong policy that should be discontinued. But, at the inception of the Buhari Administration it was found out that a whole lot has gone wrong with the fuel price issue; Buhari could not have insisted on price slash because as soon as he was sworn in, he was greeted by a deep recession – the kind that we have never experienced in nearly two decades of the Fourth Republic.”
But what appears to be the missing link here, said Adamson Momoh, a petroleum affairs consultant with the National Union of Petroleum and Natural Gas Workers of Nigeria (NUPENG), in Lagos, was “the disconnect in government policy direction”. He said that the Buhari Administration should have explained, within its first year in office, why it was unrealistic to expect the promised petrol price slash. Besides, the recession was too harsh and so made matters worse.
“Truth is that Buhari and his team never understood the terrain of the petroleum industry at the time they made the promise. Today, it’s as if they have lied, as most politicians do, to Nigerian tax-payers and those who voted them into office. Buhari should be knocked for having failed, so far, to deliver on the price reduction for a liter of fuel.
“It is a dent on his Administration,” said Momoh, that one of the many aspects of the “Change” mantra – the promise to lessen the burden of petrol on Nigerians, has not been transmitted to reality.
A petroleum dealer, Ogunekan Ara-Oluwaseun, who has filling stations in Abeokuta, and who, until recently, was a consultant with the Nigeria Labour Congress (NLC), on oil subsidy and the case of modular refineries, recalled that “ever since the birth of the Fourth Republic, petrol subsidy has been a running string in the Nigerian economy. Right from the Olusegun Obasanjo days, when Adams Oshiomole was the President of the NLC, government has been shady about the real price of a litre of petrol. There was a lot of deceit, then, in that every increase that was effected from the era of the Obasanjo Administration up to that of Jonathan, Nigerians were told that they would get a commensurate relief. Where, now, almost twenty years of tampering with the price of a product, that is very dear to the Nigerian economy, is the relief or change that Nigerians were promised? Ara-Oluwaseun demanded.
He said that during the Obasanjo Administration, there was a lot of secrecy that shrouded the very nature of the petrol subsidy to the extent that the NLC, under Oshiomhole almost went to court to compel the Obasanjo Administration to flesh out the details of petrol subsidy and what it actually meant to the Nigerian economy, how much was being spent by the Nigerian National Petroleum Corporation (NNPC) and what, precisely, should be appropriate price of a liter petrol. Then, again, it was wise counsel – the pressing need not instigate a nationwide strike, as a result, Ara-Oluwaseun said, that held the NLC back in 2007. The revelation that the NNPC made recently of nearly a billion naira of daily oil subsidy, following a prodding from an activist, Femi Falana, may still not be the right figure!
The impression created so far by the Buhari Administration, as far as the petrol subsidy is concerned is that, “it would be unwise to tamper with the price of N145.00 per liter, whichever way – up or down” said Minister of Information, Lai Muhammed. Nobody is denying that a promise was made Nigerians that the product would be sold some years back at a lesser price. But bear in mind that landing cost of Petrol today is about N180.00 per liter and even though we are officially off the radar of recession, as we use to know it, about two years ago, the  lingering effects are still with us.
“If we should slash the price of petrol, as promised, that would cause a lot of crisis, for now, in the oil industry, it is only necessary to balance the landing cost and the expected profit margin for groups like the Independent Petroleum Marketers Association of Nigeria (IPMAN), Depot and Products Marketers Association of Nigeria (DPPMAN) and other stakeholders in the downstream sector of the economy. He can ill-afford the bright and well-intentioned promise of a price cut in domestic fuel consumption for now. It is not, necessary, a case of deceit. Far from it. The reality of recession and the attendant inflation, since the past three years, have, indeed, shacked the All Progressives Congress – led Buhari Administration to tear into the issues of petrol price cut. One hopes that Nigerians will understand that”.
The Minister also argued that the critics of Buhari Administration, who accuse it of unfulfilled political (petrol price reduction) promise, should be gracious enough to bear in mind that it is the only government in the political history of Nigeria that has never raised the price of petrol, in nearly five decades.
“The Buhari Administration will not be pushed aggressively or ill-advised to take an unwise decision that would hurt a sweeping majority of Nigerian voters. This Administration is about giving government and politics a true human face.”
Whichever way the Buhari Administration goes on the petrol price case – reduce, as it has promised or increase the profit margin for IPMAN, DPPMAN etc. it’s uncertain that the desired equilibrium of sustainable price differentiation would be registered, as to relieve the federal treasury of the cost of huge cost of nearly one billion naira per day in the importation of refined crude oil for local consumption. And, so, the burden of subsidy remains. So, too, the debt of one trillion naira owed various private distributors and marketers, who have threatened legal action against the Federal Government.
“The Buhari Administration is unlikely to embark on economic policy journey on the rough road of petrol subsidy for now. To do so, amidst the diverse challenges it faces, presently – especially after the inexplicable scarcity of late last year and in January, would be political minus for it. That would eat into its political fortune; what with the 2019 elections very hard by” said Emeka Ugwuanyi, a petroleum affairs consultant based in Lagos.
He shared the views expressed by Momoh that the first step – one in a series leading to the removal of petrol subsidy – to take is the revival of the country’s refineries in Port Harcourt, Warri and Kaduna so that they could refine petrol optimally, and reduce the cost of current importation of the product.
That step would create jobs for Nigerians, because the current regime of importation is not only corrupt, but, also, poor economics, in that it creates jobs in the countries from which Nigeria is importing refined petrol” Momoh and Ugwuanyi nodded. The next measure that may not dislocate economic activities, like fuel scarcity is the construction of private refineries, especially modular ones, in the Niger Delta region, with tax relief in appreciation of their sorely needed economic intervention on the post-recession era.
“The importation of refined petrol is,” as Momoh put it, “a drain on the country’s foreign exchange purse. The Buhari Administration should muster the political will to stop petrol importation to save money for the country and create more jobs for the army of unemployed Nigerians. Those who are behind the sabotage that has made the turn-around-around (TAM) maintenance effort of government, so that they can smile, always, to the bank, should be dealt severely with.”
And because government has proved to be far from very good at managing the oil sector, Ugwuanyi, who’s a specialist in DPPMA and IPMAN operations, offered that the Buhari Administration should hand over the country’s refineries to trustworthy skippers in the organised private sector.

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