The reduction of petrol pump price

In response to the slump in the price of crude oil in the
international market, the Federal Government last week
slashed the pump price of Premium Motor Spirit (PMS),
otherwise known as petrol, from N97 to N87 per litre. The
reduction of fuel price by N10, or 10.38 percent, is to be
effected by the Petroleum Products Pricing and Regulatory
Agency (PPPRA), and Department of Petroleum Resources
(DPR).
This reduction is quite in order. It is good that the government
has joined other major oil-exporting countries that have
reduced the pump price of petrol on account of the drastic fall
in the price of crude oil. This is a welcome development that
had long been anticipated by Nigerians.
However, a reduction of N10 is not significant, considering the
sharp fall in the price of crude, from around $100 per barrel, to
about $48. This has given rise to charges that the reduction is
tokenist. Certainly, the government could have pegged the
pump price of petrol lower, to reflect the new crude price. The
reduction of 10.38 percent is said to be one of the lowest
among the oil-producing nations that are in a similar
situation. Government can still further reduce the pump price
to reflect the crash in the price of crude.
All the same, we commend the government for this decision,
which will go some way in easing the burden of Nigerians. It
is, indeed, a plus for the authorities. However, we do not think
the reduction should be limited to the price of petrol alone.
The government should consider reducing the price of other
petroleum products such as kerosene, diesel and aviation fuel.
It is scandalous that kerosene sells at a far higher cost than
petrol in the country. This is more so as the product is hardly
available below the price of N120 per litre, while it is
supposed to be subsidized by the government, and sold to
consumers at the pump price of N50. Government should do
something to stem the scarcity and high cost of kerosene.
Since the official reduction of petrol price, not all marketers
have complied with the directive. We commend those that
have effected the price change and urge those who have not
done so to comply immediately. Let them face reality and
begin selling petrol at the new rate. Nigerians expect no less
from them. Strict implementation of the change in price is very
important.
The authorities that have been given the responsibility of
effecting compliance with the directive should, therefore, rise
up to the challenge.
The slump in the price of crude affords Nigeria yet another
opportunity to re-examine the contentious petroleum subsidy
issue in the country. We say this bearing in mind that the idea
of subsidizing the price of petrol at a time of low price of
crude oil is not in order. Again, the continuing high cost of
diesel and kerosene at a time when crude oil price has
collapsed is paradoxical and unacceptable. Interestingly, N91
billion was allocated to kerosene study in the 2015 budget
estimates submitted to the national Assembly.
It will be recalled that President Goodluck Jonathan increased
the pump price of petrol from N65 to N97 per litre in 2012 due
to high price of crude oil in the global market, but has now
marginally reduced it when crude price fell.
Nigeria, since 1973, has had so many fuel price increases, with
few marginal reductions, including the current one by
Jonathan. In fact, almost every government in Nigeria has
made it a point of duty to hike fuel price at one time or the
other. Gen. Yakubu Gowon increased fuel price from 6 kobo in
1973 to 8.45 kobo. In 1976, the late Gen. Murtala Muhammed
increased it from 8.45 kobo to 9 kobo. Gen. Olusegun
Obasanjo in 1978 increased it from 9 kobo to 15.3 kobo.
President Shehu Shagari increased it to 20 kobo in 1982. Gen.
Ibrahim Babangida increased it several times from 39.5 kobo
in 1986 to 70 kobo in 1991. Head of Interim Government, Chief
Ernest Shonekan, Gen. Sani Abacha, and Gen. Abdusallami
Abubakar all effected fuel price changes that took it to N20
before Obasanjo came back to power in 1999 as president and
increased it from N20 in 2000 to N65 in 2007.
Let government organise the oil sector in a way that Nigeria
will be less susceptible to volatility in the price of crude oil.
We have crude oil in abundance. If we have adequate
functional refineries, we will not be tossed to and fro by the
vagaries of the world oil market. We will refine our own crude
and better keep our petrol pump price on an even keel.
Nigerians are, indeed, tired of frequent fuel price hikes and
contentious subsidy regimes.
The passage into law of the Petroleum Industry Bill (PIB)
should help bring the desired change in the beleaguered oil
sector. Let the National Assembly and other relevant
stakeholders do the needful to salvage this critical sector of
the economy