Nigeria’s experiment with enthroning a petrol price regime anchored on the people paying for the fuel they use, is ending, at least temporarily.
It is confirmation say some that the new government of President Bola Tinubu had not fully estimated or under-estimated the consequences of allowing the Naira to float. It is a humiliating policy reversal for the new president.
Tinubu had without fanfare announced on his inauguration day that subsidy was gone and days later the state oil company, NNPC published new petrol prices for key cities in Nigeria.
On July 18, the same NNPC further adjusted petrol price upwards with the company’s CEO Mele Kyari saying, “we have the marketing wing of our company.
They adjust prices depending on the market realities. This is really what is happening; this is the meaning of making sure that the market regulates itself so that prices will go up and sometimes they will come down also. This is what we have seen, and in reality, this is what (how) the market works,” he said.
However, Kyari was forced to eat his own words yesterday when NNPC was compelled to say it will not be raising prices of petrol despite the adjustment in the rate of the Naira to the dollar as well as the jump in international crude prices which would have taken petrol pump price to near N1,000 a litre in some cities in the country.
In a statement yesterday, NNPC said, ““Dear esteemed customers, we at NNPC Retail value your patronage, and we do not have the intention to increase our petrol motor spirit (PMS) pump prices as widely speculated. “Please buy the best quality products at the most affordable prices at our NNPC Retail stations nationwide,” the NNPCL further said.
The first signs that there was trouble for the government came on Monday when the acting governor of the Central Bank was seen leaving the villa where he had met the president who had come under severe pressure to do something about the Naira exchange rate.
Earlier Tuesday, the social media platform of the state owned television NTA released a message to say the presidency had assured Nigerians that there will be no increase in the petroleum products price.
Later Tuesday a formal statement was issued by the government saying President Tinubu had said there would be no fresh increase in the pump price of petrol, adding that his administration would maintain the current price without reintroducing a subsidy.
The president, speaking through Ajuri Ngelale, his special adviser on media and publicity, also said that his administration was working on clearing the inefficiencies in the supply chain to ensure that the current pump price is sustained
In an apparent reference to the threats by the Nigeria Labour Congress (NLC) to embark on an indefinite strike from August 14, 2923, should there be a fresh increase in fuel pump price, President Tinubu assured that his administration would not allow fuel pump price beyond the current levels. Petrol currently sells across the country for N600 per litre.
He declared that the “country can maintain the current pump price of petrol without necessarily reversing the fuel subsidy removal policy.” Contrary to this claim, there will be subsidy only that the government is not calling it what it is and it is not saying who will cover this subsidy given there is no budget cover for the payment.
The president said it was incumbent upon all stakeholders in the country to hold their peace, saying “We have heard very recently from the organised labour movement in the country with respect to their most recent threat.”
“We believe that the threat was premature and there is a need on all sides to ensure that fact-finding and diligence is done on what the current state of the downstream and midstream petroleum industry is before any threats or conclusions are arrived at or issued.
“Secondly, Mr. President wishes to assure Nigerians following the announcement by the NNPC Limited on Monday that there will be no increase in the pump price of petroleum motor spirit, anywhere in the country.
“We repeat, the president affirms that there will be no increase in the pump price of petroleum motor spirit”
The president said he is “determined to maintain competitive tension within all sub-sectors of the petroleum industry. He is determined to ensure that our policy was drawn up as well as policy implemented follows the cue that there will not be any single one entity dominating the market”
“The market has been deregulated. It has been liberalised and we are moving forward in that direction without looking back”
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The president, who also affirmed that “there are presently inefficiencies within the midstream and downstream petroleum sub-sectors”, added that “ once very swiftly addressed and cleaned up, it will ensure that we can maintain prices where they are without having to resort to a reversal of this administration’s deregulation policy in the petroleum industry.”
Pressed further on the issue of the timeframe for addressing the alleged inefficiencies, he said: “It will be within the shortest time possible”
Ngelale gave comparative examples of prices of petrol among Nigeria’s neighbours, saying the product currently goes for N1,273 per litre in Senegal, while Guinea is N1,075; Côte d’ Ivore- N1,048; Mali-N1,113; Central African Republic-N1,414; Nigeria is presently averaging between N568 and N630 per litre.