…Cites inflationary pressures, negative impact on businesses
The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has called for caution in the implementation of total deregulation of petrol prices, citing potential inflationary pressures and negative consequences for businesses.
The association warned that this could result in a sharp uptick in inflation, driving up the cost of goods and services across the board as businesses already grappling with economic difficulties would face additional strain, while consumers’ purchasing power could be severely eroded.
Heineken Lokpobiri, Minister of State for Petroleum (Oil) and the Nigerian National Petroleum Company Limited (NNPC Ltd.), told reporters on Thursday after a meeting with Vice President Kassim Shettima, on the current fuel scarcity, that the Federal Government was not fixing prices of petrol, as the sector was already deregulated.
But Dele Kelvin Oye, president of NACCIMA, on Friday, emphasised that the decision to allow PMS prices to be determined by free market forces, as provided by the Petroleum Industry Act (PIA) of 2021, could have far-reaching consequences for Nigeria’s economy.
NACCIMA criticised the government’s approach, condemning the lack of proper notice or meaningful engagement with key stakeholders before implementing such a critical policy change.
Read also: Lokpobiri attributes hike in petrol price to deregulation
The association noted that the deregulation of petrol, also known as Premium Motor Spirit (PMS), in an environment where foreign exchange illiquidity persists, could lead to increased volatility in fuel prices.
Oye highlighted that businesses and consumers alike were likely to face unpredictable cost increases, with fuel prices possibly rising from the current N800 per litre or more at NNPC stations.
“NACCIMA is particularly alarmed by the potential impact of this decision on businesses, consumers, and the overall economic landscape. The deregulation of PMS prices, coupled with the influence of foreign exchange (forex) illiquidity, is likely to result in significant volatility and unpredictability in fuel prices. This, in turn, will have a cascading effect on the cost of goods and services across all sectors of the economy.
“The possibility of a sharp increase in fuel prices, potentially exceeding the initial increase from N600 to N800 at NNPC station, is a grave concern. This will undoubtedly lead to a surge in inflationary pressures, eroding the purchasing power of consumers and putting immense strain on businesses already struggling to navigate the challenging economic environment,”
NACCIMA also raised concerns about potential social unrest, referencing earlier protests by labour unions against previous fuel price hikes. The association believes that a significant increase in PMS prices if implemented without adequate stakeholder consultation and mitigation strategies, could trigger further agitation and disrupt economic activities.
NACCIMA, therefore, called on the Minister of State for Petroleum, NNPC Ltd., and other relevant authorities to engage with key stakeholders, including the business community, labour unions, and consumer advocacy groups to develop a comprehensive and gradual plan for PMS pricing.
This approach, the association believes, is essential for maintaining economic stability, avoiding social unrest, and fostering sustainable growth in the country.
NACCIMA affirmed its willingness to collaborate with the government to find solutions that protect the interests of businesses, workers, and consumers. Oye emphasised that any policy changes in the energy sector must be carefully managed to support Nigeria’s broader economic development goals.
