The recent petrol pump price hikes- the latest in the upward surge in the commodity’s transaction- have heaped a mountainous burden on the already dishevelled Nigerians. The rise, the second in one month, represents about 16.7 percent or N143 rise across the board. The latest round of upward price adjustment, portends that in less than 18 months of the administration, the price of petrol has risen by over 440 percent (using the Lagos pricing template) with more than 600 percent in the Northeast.
“This is the metaphor for Nigeria’s economy under the weight of its own policies and mismanagement. For many citizens, it feels like a slow descent into hardship as the cost of living rises and opportunities vanish.”
Imagine a once-thriving marketplace, bustling with trade, where sellers once shouted their wares with joy, and buyers filled their baskets with goods they could afford. Today, that same market is nearly silent, with traders lamenting their plummeting sales, and buyers clutching tightly to what little cash they have left, unable to afford even the basics. This is the metaphor for Nigeria’s economy under the weight of its own policies and mismanagement. For many citizens, it feels like a slow descent into hardship as the cost of living rises and opportunities vanish.
Under President Bola Ahmed Tinubu’s (PBAT) administration, hopes were high for a turnaround. He was welcomed into office with a mandate for reform and recovery, a leader expected to bring about the much-needed change. However, his administration has inherited a complex and struggling economy, one still deeply intertwined with the fortunes of oil. At the heart of this struggle is the Nigerian National Petroleum Corporation (NNPC), a behemoth that has long held a tight grip on the country’s primary source of revenue: crude oil. But this dependence on oil, managed by the NNPC with its opaque operations and historic inefficiencies, has proven to be more of a curse than a blessing.
This article aims to delve into the challenges Nigeria faces under the PBAT administration and the NNPC’s stranglehold on the oil sector. The country finds itself in a dire economic strait, and the urgency to find who and what can save Nigeria is more pressing than ever. We will explore the policies implemented thus far, the impact of NNPC’s monopolistic control, and propose solutions that can guide the country out of this economic quagmire.
Read also: Persistent petrol price hike deepens citizens’ economic struggles
The stranglehold of NNPC/Oil dependency
The Nigerian National Petroleum Corporation (NNPC) has maintained a dominant grip over Nigeria’s oil sector since its inception in 1977. As the primary controller of oil exploration, production, and distribution, NNPC’s monopolistic position has played a crucial role in shaping the nation’s economy, which relies heavily on oil exports. This overreliance has left Nigeria vulnerable to volatile global oil prices, creating a cyclical pattern of economic booms and busts, without fostering diversification into other sectors.
Over the years, NNPC has been plagued by allegations of mismanagement and corruption, further contributing to Nigeria’s economic stagnation. Inefficiencies within the organisation, coupled with a lack of transparency and accountability, have resulted in significant revenue losses and underinvestment in critical oil infrastructure. This has stifled growth and hindered efforts at economic reform.
The recent removal of fuel subsidies, a cornerstone policy of President Bola Ahmed Tinubu’s administration, was intended to address fiscal challenges but has exacerbated economic hardships for Nigerians. With fuel prices soaring and inflation rising, the immediate effects have been harsh, increasing the cost of living for millions. While the removal aimed to stabilise the economy, its socio-economic consequences have been profound.
Is Tinubu’s policy truly “T-pain” or are the pains self-inflicting?
In the wake of the recent price increase, a trove of reactions greeted the new development with many Nigerians asking the President and the national oil giant towards reversing the trend. For example, Joe Ajaero, the president of NLC, has asked the president if increasing the pump price of petrol is what the PBAT administration lives for. Weighing on the development, former Vice-President Atiku Abubakar wrote on X: “The haphazard and disingenuous approach of the current administration to fuel subsidy management has been the reason we are in this current economic crisis in the country. As things stand, there will be no let-up in the escalating inflation rate, which is drowning the material well-being of Nigerians. It is even more worrying that T-pain is undisturbed by the hardship in the country.”
Tellingly, T-pain is the stage name of the popular American artist; many commenters and critics on the microblogging site have used it to describe PBAT’s policy over the burgeoning cost of living crisis.
However, the FG has said it should not be blamed for the recent rounds of hikes in petrol prices. Claiming that the development is in response to prevailing circumstances in the energy industry. The First Lady, Mrs. Oluremi Tinubu during a courtesy visit to the Ooni of Ife on Thursday also asserted that her husband is not responsible for the current pain! In her words, “We are just 18 months into our administration; we are not the cause of the current situation; we are trying to fix it and secure the future”.
As Nigerians are coming to term with the latest rounds, the Minister of Agriculture announced the commencement of the sale of FG’s rice at the reservation price of N40,000 alongside a raft of other policies the administration in their wisdom thought would bring succour and relief to Nigerians. The government has also been clamouring for the switch to Compressed Natural Gas (CNG)-powered vehicles by setting up the Presidential Compressed Natural Gas Initiative (PCNGi) in October 2023. As the country grapples with the consequences of removing fuel subsidies and rising petrol prices, the PBAT administration floated The Presidential Compressed Natural Gas Initiative (PCNGi) as part of the administration’s broader strategy to reduce reliance on petrol and promote alternative energy sources, particularly Compressed Natural Gas (CNG). Since its introduction, PCNGI has made notable strides in promoting the use of CNG as a viable alternative to petrol, with key objectives centred on reducing fuel costs, improving energy security, and fostering a cleaner environment.
We at BDI feel the need that as Nigerians are now scrapping for alternatives to the popular household item used for domestic and industrial uses, is CNG the way?
CNG argument?
Compressed Natural Gas (CNG) presents a viable alternative to reduce Nigeria’s overreliance on petrol. Clearly, CNG offers a cleaner, more cost-effective solution for powering vehicles and machinery. Nigeria is home to vast reserves of natural gas, and tapping into this resource can lessen the strain on foreign exchange used for importing petrol, while also reducing carbon emissions and promoting a greener economy.
The initiative has been successfully implemented in countries like India and Brazil, where it serves as a cheaper alternative to petrol, helping to reduce fuel costs for consumers and providing a buffer against global oil price fluctuations. In Nigeria, expanding CNG infrastructure could ease the financial burden on both the government and citizens, creating a more sustainable energy landscape.
However, challenges to adopting CNG in Nigeria include the need for substantial investment in refuelling infrastructure, retrofitting vehicles, and raising public awareness about its benefits. Additionally, the government must provide policy support and incentives to encourage the transition, ensuring that CNG becomes a key part of Nigeria’s energy strategy. With proper planning, CNG can contribute to long-term energy security and economic stability.
Read also: Petrol price pain turns CNG gain for Nigerian drivers
BDI Explainer: CNG V Fossil fuel
Who will rescue Nigeria?
Returning to the initial poser, who will rescue Nigeria: To rescue Nigeria’s economy, inclusive reforms based on strategic engagement and consultation are essential, starting with the Nigerian National Petroleum Corporation (NNPC). Ensuring transparency and accountability in managing oil revenues, and considering decentralisation or privatisation, could improve efficiency and reduce its monopolistic hold beyond oil, alternative, cleaner sources. Nigeria must diversify into sectors like agriculture, technology, and manufacturing to create alternative revenue streams and reduce vulnerability to oil price fluctuations.
If we care for our future and our country, which the NNPC seems intent on monopolising for its own interests, we must take a stand. Our fight for democracy should not benefit a single entity alone. Nigerians did not overcome military dictatorships only to allow a national corporation like the NNPC to dominate the economy with unchecked power. We need a courageous leader with a comprehensive plan, not only to champion the democratic struggle against NNPC’s overreach but also to dismantle its harsh, crippling economic policies that are enslaving the people.
Strengthening regulatory institutions is also crucial for ensuring efficient policy implementation and economic stability. Strong institutions will help enforce regulations, fight corruption, and maintain fiscal discipline. Lastly, fostering public-private partnerships (PPPs) can boost investment, innovation, and job creation in critical sectors like infrastructure and energy, providing the necessary support for sustainable growth and development.
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