NIGERIANS sighed with relief when the Nigerian National Petroleum Corporation, NNPC, debunked an alleged plan to increase the N145 per litre pump fuel price of Premium Motor Spirit, PMS or petrol.
The statement by the new Group Managing Director, GMD, of the NNPC, Mele Kyari, that the N145 per litre was the cheapest in West Africa created widespread anxieties due to the prevailing economic hardship in the country.
But in clarifying this statement, Kyari said it was made in the light of the huge disparity in the pump price of petrol between Nigeria and its neighbours which has been encouraging cross-border leakages and needed the intervention of the National Assembly to tackle the problem of smuggling.
He advised Nigerians to disregard any report of a fuel price hike, assuring that the pump price of PMS remains at N145 a litre.
But while NNPC’s clarification is welcome, there are indications that the proverbial “evil day” is still very much around the corner. By experience, the Federal Government has been known to deny a price hike one day and firmly impose it on the populace the following day.
Besides this, the government has continued to feed the public with stories of increased subsidy spending on petrol in spite of the massive jump in pump price in May 2016 even after President Buhari had before he came to power, said fuel subsidy was “a scam”.
The NNPC had in December last year informed that it had been subsidising the product by about N1.5billion every day which mathematically amounts to about N5.4 trillion annually. Besides, many experts, including BudgIT (the budget tracking and financial advocacy group) had asked President Buhari to remove petrol subsidy as it had gulped over N10trillion in 13 years.
Against the background of our resort to massive borrowings and dwindling ability to fund our budget with earned revenue, it is obvious that the removal of petrol subsidy is an important event whose time is here. As advocates for total deregulation, we had hoped that 2016 price hike, with public goodwill still strong on Buhari’s side, was the ripe occasion for subsidy removal.
We must prepare for this inevitability by completing the renovation of our four refineries and fast-tracking the coming on-stream of more modular refineries, while we wait for the Dangote multibillion-dollar refinery to open shop next year.
With the massive increase in local refining capacity, we can give our plants incentives to produce at affordable prices, while we totally deregulate the downstream sector.
The N5 trillion we waste on subsidies can be spent on infrastructural renewal nationwide and the revival of our educational system.
It will mitigate our indebtedness and give our economy breathing space. Fuel subsidy must go, but we must plan a gradual approach to it to make it easier on the people.