From the statement released by the Minister of State for Petroleum Resources, Ibe Kachikwu, on Wednesday, the Muhammadu Buhari-led government appears to have made a full deregulation of the downstream sector of the Nigerian petroleum industry by its official removal of subsidy on Premium Motor Spirit (PMS), commonly known as petrol.
Announcing the policy change after a joint meeting with Senate leadership, labour union representatives and Governors Forum, the Minister attributed the fuel scarcity, supply difficulties and the exorbitant prices of fuel experienced by Nigerians in recent times to the inability of importers of petroleum products to source foreign exchange at official rate due to massive decline of foreign exchange earnings of Federal Government. As a result, the private marketers have not been able to meet their 50% portion of national supply.
To end the travails of the people, government has removed subsidy on petrol and has allowed the Petroleum Products Pricing and Regulatory Agency (PPPRA), to hike the price of petrol from N86 per litre to N145 per litre. Buhari’s government expects that the abrupt subsidy removal, “will lead to improved supply and competition and eventually drive down pump prices, as we have experienced with diesel. In addition, this will also lead to increased product availability and encourage investments in refineries and other parts of the downstream sector. It will also prevent diversion of petroleum products and set a stable environment for the downstream sector in Nigeria”.
No doubt, the expectations envisaged by the government are the reasons for a deregulated industry. What they needed to have done aright, however, was to ensure that those licensed to refine petroleum products in the country resume operation in full swing and those not capable to function should summarily be unlicensed. Those who were granted license to refine petroleum are presumed to possess the potentials to perform. When the various operators flood the market, as in the telecommunication sector, the end result becomes competitive, favourable products pricing – whether in the short or in the long run. Once the private operators are fully functional with government effectively in supervision, the scarcity and supply cankerworm would be conquered forthright. This is deregulation with sensitivity!
Arbitrary removal of fuel subsidy and immediate pegging of price of the most sensitive commodity in the country without already available palliatives, nor ensuring that other issues on effective deregulation are addressed, renders the deregulation exercise as inconclusive as all the elections conducted by INEC under President Muhammadu Buhari.
With the burden of electricity tariff increase, high cost of living generally in a state of massive unemployment, Nigerians are sacrificing too much already to “fantastically” suffer higher transport fares that accompany pump price increase.
Finally, to underscore the level of insensitivity and callousness imbued with President Buhari-led administration, there is nothing in place to cushion the untold effect of the subsidy removal. Recall that when ex-President Goodluck Jonathan attempted it in 2012, he was able to put some tangible things in place to cushion the effect. This is because he was a compassionate President who had his people’s interest at heart.