Increase in fuelprice, any end in sight?
By Babatunde Ayedoju
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Midway into last month, September, Nigerians woke up to the news of another increase in fuel pump price from about N600 to N855/N918 per litre, depending on the location of purchase in any of the retail outlets of the Nigerian National Petroleum Corporation Limited (NNPCL) nationwide.
Nigeria has had a long and tortuous history of increases in fuel pump prices. For example, in 1973, the administration of General Yakubu Gowon increased the price of petrol from 6 kobo to 8.45 kobo, a 40.83 percent increase. Fast-forward to the year 2000, during Chief Olusegun Obasanjo’s first tenure as elected President of the Federal Republic of Nigeria, fuel prices jumped from N20 to N30, a 50 percent increase. However, the then Obasanjo administration later dropped it to N22, following public protest.
Shortly before Obasanjo left office in 2007, the price of fuel moved from N65 to N75. By the time his successor, Alhaji Umar Musa Yar’adua, came in that same year, he dropped the fuel price to N65, a rare feat, so to speak.
Following the unpopular fuel subsidy removal announced by President Goodluck Ebele Jonathan in January 2012, the price of fuel shot up from N65 to N141. Nevertheless, by the time Nigerians took to the streets in protest, Jonathan reversed his decision by taking the fuel price backward to N97. Then by 2015, that same administration took the price to N87.
A year into the administration of President Muhammadu Buhari, in 2016, the price of petrol moved from N87 to N145, later N195. It is on record that before Buhari left office in 2023, he had made plans to finally do away with the fuel subsidy which had become unpopular among a section of Nigerians who called it a scam.
By the time President Bola Ahmed Tinubu came in on May 29, last year, during his inaugural address, he announced that “fuel subsidy is gone.” Immediately, fuel marketers nationwide responded to that announcement by making an upward adjustment in the pump price. The price of petrol moved from N195 to N557, later N617.
A lot of Nigerians expressed resentment towards the step taken by the new administration, especially because the existing Kaduna, Warri, and Port-Harcourt refineries of the Federal Government were moribund.
Therefore, when Dangote Industries Limited established a refinery in Lagos, there were hopes that the presence of this refinery would bring smiles to the faces of Nigerians, after all this is an indigenous establishment. Therefore, the products are not going to be imported. The logic of many was that one way or the other, there would be a drop in the retail price of petrol.
Among the news that filtered into the ears of members of the public was that the NNPCL was going to be the sole buyer of Dangote Refinery’s products, a refinery that is said to have the capacity for refining 650,000 barrels of crude oil per day.
To the surprise of Nigerians, after the Dangote Refinery sold its first batch of crude oil products to NNPCL, the latter said that it bought the products at N842.61 per litre from Dangote and added all levies taking the pump price to N950.22 per litre in Lagos. Consequently, independent marketers also raised their retail prices, such that people now buy petrol for as much as N1,200 or more from independent marketers.
Looking at the persistent increase in the price of petrol, one may want to ask if this is an insurmountable challenge. Is there a problem without solution or is no solution in sight at all?
Commenting on the trend, Professor Bayo Fatukasi, an economist, said that the economy of Nigeria is going through serious overhauling, describing the current situation as a result of the administration’s effort to put things right.
Professor Fatukasi who suggested that Nigerians should give the Federal Government a little time added, “the price of petrol may not come down for now, but with measures put in place by the government, we will surely break even.
“People think that Dangote Refinery will bring down the price of petrol, but most of the inputs are imported and these things are in dollars. We are not producing anything but mounting unnecessary pressure on foreign exchange. We have to endure the pains and get things right once and for all. Provided all the policies on the ground are not abandoned, I can assure you as an economist that tomorrow is sure.”
Professor Simon Ehiabhi, a historian, opined that Nigerians may not see much improvement in the price of petrol for now, adding that even the Dangote Refinery which a lot of people put their hopes in is a private company established to make profit.
He noted that Nigeria had entered contracts with foreign companies before Dangote Refinery came up. It will take some time for things to become stable.
The Professor of African Political History who stated that it may still take up to two years for things to change positively added that even with the presence of an indigenous company like the Dangote Refinery, it is only availability of refined products that is guaranteed, not a reduction in pump price.
Dr Bayo Fasunwon, a political scientist, attributed the unabated increase in fuel pump price to price volatility, adding that once the demand is high, there will be a need to produce more and an increase in the cost of production will also lead to an increase in the price.
The political economist noted that the presence of Dangote Refinery may not change the narrative because already there are foreign companies that produce crude oil products at a minimal price.
While noting that there are forces within the country that want the status quo to remain, Dr. Fasunwon added that if the global price of crude oil does not come down, we may not see the pump price of petrol coming down as well.
According to him, there is a sort of NNPCL/Dangote monopoly and if it continues without the modular refineries producing, there will be no end in sight to incessant increase in fuel prices.
“Likewise, the government does not seem to be interested in addressing the matter at the moment. They don’t seem to be concerned about it for now. That means we might even see an increment as time goes on,” he said.