President Bola Tinubu’s promise to keep petrol prices unchanged means the government is re-imposing price controls in the market. However, this will do little to help Nigerians who have struggled with rising prices for years.
After fuel traders signalled on Monday that the price of petrol may rise further as the naira declined rapidly, Mr Tinubu said his government will not allow a further increase from the current N617 a litre.
In doing so, the president effectively ended his administration’s three-month-long deregulation of the sector with the potential that price surges will be cushioned by subsidy payment.
“If fuel prices will no longer increase then the government has re-introduced subsidy through the back door,” Johnson Chukwu, founder of Cowry Asset Management Limited told Channels TV.
President Tinubu’s removal of petrol subsidy on his first day in office, without adequate plans for mitigating its impact, pushed the pump price from N185 a litre to N617, punishing millions of citizens with unusually high living costs.
In July, Nigeria’s annual inflation recorded 1.29 percentage points as its biggest jump across two months, made worse by the naira’s decline. Inflation rose to 24.08%.
The president’s offer implies the price of petrol will remain high, only not higher. That will translate to sustained high prices of goods and services.
“The only thing that can save the country is for the energy cost to be reduced. No country in the world ever survives the high cost of energy because the wheel of growth revolves around energy,” said Iniobong Akpabio, a professor of agricultural economics at the University of Uyo.
Professor Akpabio said things don’t look promising even with the intervention.
“Go to the street, less cars. You have to plan how to move nowadays and by the time schools resume, parents will cry more because school fees will rise. Things are good because children are home,” he told Pluboard.
He said what the country needs is energy, not palliatives.
“Any small, micro, macro businessman needs energy to produce. The issue of palliatives makes no meaning. Energy is the key thing for manufacturers to produce easily and prices will go down and the transporters will have cheap fuel to buy,” he said.
– Highest amongst OPEC
In announcing the president’s intervention, spokesperson Ajuri Ngelale reminded Nigerians how “cheap” petrol was in the country, compared to Senegal, Guinea, Côte d’Ivoire, Mali, and Central African Republic.
Analysts have raised a counter-point: Nigeria has one of the highest petrol prices amongst oil producing countries that form OPEC.
According to the Abuja-based International Centre for Investigative Reporting, as of July, Venezuela had ₦3.3, Iran: ₦23, Libya: ₦25, Angola: ₦287, Algeria: ₦270, Kuwait: ₦271, Iraq: ₦452, Qatar: ₦456, Saudi Arabia: ₦490, and Ecuador: ₦501.
The only countries where petrol are more expensive than Nigeria are UAE: ₦621 and Gabon: ₦891.
Most of the OPEC countries also have higher minimum wage and GDP per capita than Nigeria.
“Whatever it is that should reduce the price of petrol is something that Nigerians should be happy about because it is scandalous that an oil producing country like Nigeria should be importing petrol,” Nsemeke Udoakpan, chairman of Akwa Ibom chapter of Civil Liberty Organisation told Pluboard.
“What rocket science is involved in petroleum refining that these local boys in Port Harcourt and the creeks of Niger Delta are refining it why is it difficult that the federal government cannot fix refineries in over a decade,” he added.
-Not coming down soon
Many do not expect things to get better soon. For one, crude oil prices are rising. On Thursday, Brent rose $1.06 to $84.5 a barrel while Bonny Light rose $0.39 to $86.80.
The increase means the likelihood of the price of petrol falling soon is little.
There is also the concern of marketers altering prices arbitrarily. Osayande Williams, a user on X, formerly Twitter, said in Lagos, the price had changed already where he bought fuel.
“No fuel hike indeed. I bought fuel dis evening from a Mobil filling station in Ikorodu for #600 per litre. D same place I bought fuel for #570 per litre 3 days ago,” he wrote Tuesday.
Other goods, especially food, are also expected to continue to stoke headline inflation for other reasons, including insecurity and devaluation of naira.
Naira remains unstable after this week’s intervention that forced the currency up on Wednesday. The response is not seen as a long-term measure.
“We aren’t surviving the current price so this isn’t a news at all,” another X user wrote in response to news of the president’s intervention.
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