• Friday, March 29, 2024
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ANALYSIS: As petrol scarcity persists, Nigerians live in denial about their complicity

ANALYSIS: As petrol scarcity persists, Nigerians live in denial about their complicity

Long fuel queues have persisted for a month across many Nigerian cities as people who believe cheap fuel is a divine right, goaded by labour unions, suffer the effects of insisting their government buy petrol at N400 per litre from refiners in Europe and sell locally at N165.

Nigerians are against any attempt to raise the pump price of petrol to narrow the difference between what their government pays for the product and sell locally, but eagerly buy at N450 per litre from black marketers who set up shop right in front of shuttered petrol stations.

The Nigerian Labour Congress and the Trade Union Congress, two national labour unions, have often called for national strikes to protest removal of subsidies on petrol for over two decades.

For two decades, they have been arguing that local refining will cut petrol prices, hence the government must fix the refineries before it removes subsidies.

Yet, these refineries have been left to rot for years by oil workers including those who are members of labour unions, despite being paid salaries to keep propping up a failing enterprise.

However, local refining in oil-producing countries hasn’t translated to cheaper petrol in Angola and Arab countries. High crude oil prices tighten refining margins globally – a reality labour unions pretend not to know.

So every year, they choose strikes over reason. Adams Oshiomole rode on the waves of labour agitations against subsidy removal to achieve national name recognition and won an election to govern Edo State, an oil-producing state.

After a stint in government and now a chieftain of the ruling party who came into power claiming to fight for the poor, he now advocates the removal of petrol subsidy.

Those who succeeded him have found a template to fame. But by insisting the government fix the moribund refineries before removing subsidies, even when high crude oil prices mean petrol can still not sell any lower than they are currently, labour unions could be mobilising Nigerians to fight against their own interest.

Months to the general elections, presidential candidates have all said they would remove subsidies on petrol. The labour unions seem content to serve as the convenient foil for their inability to remove it.

Marketers, who spoke to BusinessDay for this story, said the government, the Nigerian people and labour groups maintain a national pretence when it comes to petrol as if market rules somehow exempt petrol.

They say the status quo is maintained because many Nigerians are benefitting from the current situation.

“Every single day the arbitrage exists, there are those local ordinary folk on both sides of the border smuggling petrol. That is their daily living, so this is an economic problem that requires an economic solution,” said Clement Isong, chief executive officer of Major Oil Marketers Association of Nigeria.

Read also: Black-market petrol at N350/litre mocks subsidy

Governments around the world, even in Western countries, decide on what subsidies to provide their people. The United States and the European Union, for example, provide subsidies for its farmers.

The trouble with the Nigerian petrol subsidy is that half of the petrol imported is smuggled and sold outside the country. Along the borders, thousands of young men use motorcycles to smuggle subsidised petrol to neighbouring countries.

Petrol subsidy disproportionately benefits rich people who own multiple cars. Many poor people use public transportation but an inadequate, functional mass transit system means that they pay higher bus fares in smaller ‘Danfos’ running on petrol.

Worse still, only a few cities like Lagos, Port Harcourt, Abuja benefit from the subsidy as outside these cities, Nigerians buy petrol far above the government-approved prices.

Subsidised petrol that the Nigerian National Petroleum Company Limited (NNPC) sends through pipelines to ease the burden of tankers on roads are broken open by Nigerians to steal petrol.

The NNPC has been forced to rely on tankers plying rickety roads, further complicating the logistical nightmare in moving products across the country. When these tankers fall, Nigerians rush to scoop this fuel.

The ecosystem of Nigeria’s troubled petrol sector is run by corrupt Nigerians who benefit from the rot – from inside the NNPC to the thousands of Nigerians engaged in smuggling Nigeria’s petrol in tankers, on motorcycles and tricycles. Everyone is culpable.

“We must remove subsidies and adjust PMS prices to match our regional neighbours to curtail smuggling or it will kill our economy” warns Babajide Soyode, a former general manager at the NNPC, said in an interview.

The government, labour unions, the NNPC and even most Nigerians know that selling petrol at N165/litre when oil prices are rising to $100 a barrel, when petrol price everywhere else in Africa is over N500/litre is unsustainable but maintain a national pretence as if Nigeria is exempted from globally applicable market rules.