Tougher times ahead for Nigerian fuel consumers

May 16, 2005 02:00 AM

by Ahmed I. Shekarau

Nigerians woke up to be treated to another round of fuel price hike. This followed a subtle inducement to fuel marketers by the Petroleum Products Pricing Regulatory Agency (PPPRA).
The PPPRA said that it has been under intense pressure from stakeholders in the downstream oil sector to raise fuel prices. Notable among such stakeholders putting pressure on the PPPRA, it said in a statement signed by its General Manager, Corporate Services, Wole Adamolekun, include the National Association of Road Transport Owners (NARTO), the Petroleum Equalisation Fund (PEF), the Petroleum Tanker Drivers (PTD) and the Independent Petroleum Marketers Association of Nigeria (IPMAN).

According to the PPPRA, these groups want the agency to revalidate and resuscitate "market related adjustments on petroleum products to compensate for the adverse cost of moving products (from the South where three of the four refineries are based and all the nation's seaports are located), to the North".
Whatever that grammar means, the implications are that consumers of all commodities and services (essential and otherwise), would have to pay through their noses. Already, petroleum products marketers have increased prices of petrol from N 51.50 as it was hitherto sold in Abuja, to N 56.00, while the pump prices of kerosene and diesel been jerked up have risen from N 51.50 and N 58.00 to N 61.00 and N 65.00 respectively.

These huge increases were made even though the Nigerian National Petroleum Corporation (NNPC), the major importer of refined petroleum products, only added N 2 to its ex-depot price which is now N 43.50 as against N 41.50.
The Nigerian Labour Congress (NLC), is already threatening a show down with the federal government, if it (the government), does not ask its relevant agencies to direct the fuel marketers to revert to the former oil rates. That not withstanding, it is quite evident that fuel price hikes would continue unabated with the poor state of the nation's refineries. Nigeria today, relies mainly on the importation of petroleum products with only about 20 % of the 50 mm litres of petrol consumed daily in the country refined by the four refineries.

This therefore puts Nigeria and its citizens in a very precarious situation once there is instability in the global oil market. For instance, crude oil prices currently hovers between $ 56 and $ 58 per barrel. And only recently, the president of the International Monetary Fund (IMF), Rodrigo Rato, told the world some few days ago to expect further oil price increases in the next two years, hinting that global crude prices may reach $ 100 by the end of 2007.
This, no doubt, portends greater hardship for Nigerians with the poor state of the country's refineries, just as there are virtually no plans by the government or any investor to urgently establish new refineries in Nigeria. Eighteen companies were offered licenses to set up new refineries in the country in 2002. But about three years afterwards, none has started establishing any refinery.

In the interim, there is no indication that the present administration has the will to force down prices of fuel, even if the global prices slump. When the PPPRA, through the Senator Ibrahim Mantu-led committee on palliatives asked marketers to review fuel prices reached with the organised labour, the marketers flagrantly ignored such directives.
And while motorists continue to pay more for fuel, the end consumers of goods and services are bound to pay much more as the ripple effects of fuel price hikes extends to those of other products and services. Although commuters, particularly those in Abuja, are yet to notice any increase in transport fares for intra and inter-city travellers, sources said the National Union of Road Transport Workers (NURTW), is planning a meeting where it might direct its members to make a commensurate hike in fares.

And once that is done, suppliers of other goods and services too will definitely adjust their rates in line with the new fares they would be asked to pay for conveying their wares. This then leaves the man on the street at the receiving end of the Obasanjo administration's weird economic reform programmes.
That the organised labour has vowed to fight back may not be a source of solace for the Nigerian masses. The NLC is set to meet to review the prevailing situation and take a definite stand. NLC president, Mr Adams Oshiomhole, was reported to have vowed that the anti-strike labour law passed by the National Assembly and assented to by the president not withstanding, the congress will still mobilise Nigerians for “mass action” against government's.

The new labour Act sets out stringent condition's for the unionists to call out workers to strike, while excluding certain 'strategic' groups of workers from joining strikes. These “strategic” employees include those in the aviation industry, health etc.
It is unclear what action the NLC might take when it meets, particularly if the marketers fail to reverse their pump prices, something which is very unlikely. If it calls Nigerians out on a 'mass action' against the recent hike, it is very likely that majority will answer its call. This is obvious given the dwindling popularity of the government in the esteem of ordinary Nigerians, especially at this period when a broad spectrum of the populace view many top ranking officials of this administration as rogues, with the spate of revelations about corrupt practices in high places.

Indeed, it is even curious that the government allowed such a fuel price hike at a time when it is unable to convince the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the National Union of Petroleum and Natural Gas Workers (NUPENG), both very strategic groups in the nation's oil sector, to back down on their planned strike action over certain unfulfilled demands. If these two groups embark on strike coupled with an expected call by labour for a nationwide mass action, the Nigerian economy will be brought on its knees.
PENGASSAN and NUPENG members work to extract the nation's crude oil and once they down tools, Nigeria may temporarily halt the exploration of oil through which it earns 90 % of its revenue.

Source: Daily Trust
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