The Academic Staff Union of Nigerian Universities (ASUU), yesterday, condemned the increase in the pump price of petrol, describing it as ill-timed and insensitive.
The Petroleum Products Pricing Regulatory Agency (PPPRA) had announced a new retail price band for oil marketers. In a circular dated July 1, the downstream regulator said oil marketers are now expected to sell petrol within the price range of N140.80 and N143.80.
Part of the circular reads: “Please, recall the provision for the establishment of a monthly price band within which petroleum marketers are expected to sell PMS at the retail stations, based on the existing price regime.
“After a review of prevailing market fundamentals in the month of June and considering marketers’ realistic operating costs as much as practicable, we wish to advise of a new PMS guiding pump price band of N140.80-N143.80 per litre for the month of July 2020.
Speaking on behalf of the union, ASUU President Prof. Abiodun Ogunyemi, told The Guardian in a telephone interview that the increment “would no doubt have a spiraling effect on the cost of living, transportation, commodity items, and other areas of peoples’ lives that are essential for meaningful living.”
Accusing the Federal Government of “planning to increase the burden of the people”, Ogunyemi asked: “What stops us from fixing our refineries all these years? Buhari’s administration has been around for five years now, and all they keep telling us each time they tinker with the pump price is that they would use the fund generated from what they saved from subsidy to address the problems of the refineries. But none of the refineries can be said to work up to 50 per cent capacity.”
He added: “We need to buckle up but we know no government will budge unless pressures are brought to bear and I believe at the appropriate time, those who know how to bring that pressure will come up.”
Also, the Nigeria Labour Congress (NLC) might protest the increase. NLC President Ayuba Wabba had on Tuesday in Abuja declared: “The Nigeria Labour Congress rejects any further hike in electricity tariff, the pump price of petrol and other essential public utility charges. The NLC is fully ready to mobilise our people to resist attempts by anyone to impose modern-day slavery on Nigerians – be they distribution companies (DisCos) or regulators of public utilities.”
The Guardian had reported in May that Nigerians might have to brace up for an increase in the pump price of fuel as oil prices began to head towards $40. This followed the easing of lockdown measures by countries, which showed signs of a gradual recovery in fuel demand, supported by ongoing output cuts.
With oil prices making a rally, there are concerns for consumers and the real sector. Industry observers had urged the Federal Government to make pronouncements that provide clarity on where, when, and how Nigeria would do away with petroleum subsidy.
Nigeria’s Bonny Light Crude hit $41.62 per barrel yesterday.
The Federal Government said in March that it had bowed to long-standing pressure to restructure the downstream oil sector and had therefore removed oil subsidy after the country was hit by lower oil prices, which placed more pressure on its foreign exchange reserves.
Precisely, the Lagos Chamber of Commerce and Industry (LCCI) and Transparency International (TI), among others, asked the presidency to clarify terms for the subsidy removal.
The pressure groups also questioned the resolve of the NNPC on the subsidy, wondering if the declaration is “enforceable since the Petroleum Industries’ Bill (PIB) is not in-sight anytime soon?”
The Muhammadu Buhari administration moved the petrol price peg of N145/litre to N125 in March this year, the first time the price would be adjusted since it was reviewed in 2016, from N86 per litre to N145 by the President on his assumption of office.
With no new template for the month of May, the Petroleum Products Pricing Regulatory Agency had stated that the cost of petrol would be reviewed monthly in accordance with the fluctuation of crude oil price in the international market.
“What we have in place is a market reflective pricing system. Petroleum products prices will be adjusted in line with market realities and the result is what we see presently with prices on the downward slide,” the PPPRA’s Executive Secretary, Abdulkadir Saidu, said recently.
Saidu added: “Accordingly, the price will naturally be adjusted to reflect a true picture of market fundamentals at any particular period, high or low.”
Reacting to the price increase, a professor of Capital Market and Head of Banking and Finance Department at the Nasarawa State University, Keffi, Uche Uwaleke, said: “Until we develop the capability to refine enough crude oil for domestic consumption, the pump price of PMS will continue to be exogenously determined. This is the sad reality.
“Now that the government has lifted the ban on interstate travel as part of measures to restart the economy, we cannot afford any round of fuel scarcity and the attendant costs to the economy.
“In due course, especially post-COVID-19, I expect the government to fully deregulate the downstream sector, paving way for private investments and generating a competitive environment that will drive down petroleum products prices ultimately. Only then, will the hand of the PPPRA become less visible.”
Also, a labour expert and lawyer, Paul Omoijiade, said this is not the best time for an increase. “They reduced it during the lockdown, only to increase it now that companies are reducing workforce and food prices have gone over the roof. As long as we have the same set of recycled politicians directing us in this country, we shall continue to encounter such,” he said.
Director-General, Lagos Chamber of Commerce and Industry, Muda Yusuf, said since Nigeria is operating a deregulated pricing regime in the petroleum downstream sector, we should expect changes in prices as some key variables change.
“This is the essence of a liberalised market. What is critical is to ensure that an effective framework for the unfettered competition is created. The idea of the PPPRA orchestrating the price movement is not consistent with the ideals of a market-driven framework. In the long run, it is in the interest of the economy to have a liberalised market regime for the downstream oil sector. This model will also incentivise more investment in domestic refining of petroleum products.”
On his part, the immediate past NLC General Secretary Dr Peter Ozo-Eson blamed the development of volatile exchange rates. He added: “We in the labour movement are convinced that this problem will not end until we find a way to revitalise our domestic refineries. Our continued importation will put more pressure on the naira and it will continue to lose value. The situation will be on the unending scenario.”