The removal of petroleum subsidy was announced by President Bola Tinubu three months ago, and Nigerians are still adjusting to the over 400 percent increase while waiting for the government’s promised palliatives.
Despite President Tinubu’s assurance that the price of PMS won’t rise further, the rise in crude oil prices on the global market may result in a further increase in the cost of gasoline at the pump.
The cost of crude oil on the world market has increased to $94 per barrel, the highest level in the previous 10 months. Market watchers predict that the price will surpass $100 as wintertime demand rises.
In the past, this increase would have been welcomed because it would have meant more money for the Nigerian government, but now it means that Nigerians may end up paying more for fuel.
President Tinubu had guaranteed that prices would remain stable last month by “addressing the inefficiencies within the midstream and downstream petroleum subsectors to maintain prices where they are without having to resort to a reversal of the administration’s policy in the petroleum industry.”
Mele Kyari, the group chief executive officer of NNPC Limited, informed a few House of Representatives members on Friday that NNPC Retail is making moves to secure sizeable market shares in the downstream industry in order to exert control over the downstream market.
You may remember that NNPC Retail bought the retail locations of Oando Limited in December.
According to Kyari, the agreement gives NNPC Retail a 30 percent market share, giving it the power to control prices. He explained that because NNPC Retail won’t raise prices, other petroleum marketers will be forced to maintain pricing.
“Some weeks ago in Lagos, There was a small queue because one company increased their price by N7. As simple as this, everybody rushed to our filling stations, and a queue developed. This is the security that the PIA guarantees.
“That Nigerians will have choices and they will not be exploited. We will be the market balancer. We will create stability in the market and Nigerians will not be exploited,” he said.
Despite the President’s and the oil chief’s assurances, Nigerians are nevertheless apprehensive about the increase, especially given the deregulation of the industry.
Dr. Babatunde Adeniran, an economist, claims that given the dynamics of supply and demand on the global market, an increase may be unavoidable.
“Yes. It is inevitable because they (marketers) adjust prices depending on the market realities, i.e., forces of demand and supply,” Adeniran says while responding to a question on the chance of a price hike.
Substitute energy sources
In an August nationwide broadcast, President Tinubu pledged to invest N100 billion in compressed natural gas (CNG) buses to lessen the effects of the elimination of subsidy.
“The Nigerian Government has put aside N100 billion to purchase 3,000 twenty-seater buses powered by Compressed Natural Gas for deployment in all the states in the next nine months,” President Buhari said.
Adeniran pleaded with the government to help the common people by subsidizing the CNG kits.
“One of the means to mitigate the effect is to source for an alternative source of energy. One such alternative is the CNG. It remains the best source since it is relatively cheaper and cleaner.
“But to assist, the government can subsidize the CNG kit. If the government is able to achieve that, more people will embrace this.
“Nigeria has the capacity to meet the demand; we currently flare a lot of gas. Instead of flaring the gas, we can channel it into CNG which would be more productive,” he said.
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