With global oil prices approaching $70 per barrel, Nigerians have been told to prepare their minds for N225 fuel price per litre in the spirit of deregulation.
Speaking during a ministerial briefing at the Presidential Villa, Abuja, Managing Director of NNPC, Mele Kyari said the corporation can no longer bear the burden of underpriced sales of premium motor spirit (PMS), better known as petrol, adding that the real market price would soon be implemented. Speaking further, Kyari noted:
“The price could have been anywhere between N211 and N234 to a litre. The meaning of this is that consumers are not paying for the full value of the PMS that we are consuming and therefore someone is paying that cost.
“That is why early last year if you recall, the full deregulation of the PMS market was announced and we have followed this through until we got to September when prices shifted to N145. As we speak today, I will not say we are in a subsidy regime but we are in a situation where we are trying to exit this subsidy or underpriced sale of PMS until we get to terms with the full value of the product in the market.”
Interestingly, consumer spending is one of the main engines of economic growth, and its trajectory in the months ahead will be an important indicator of Nigeria’s economic health. If the current trend continues, average daily spending could break through the bench mark, and thus denote a return to the level that is characterized by high spending, far beyond the earning power of the consumer.
Growth in spending has been quite constant in Nigeria. Other attitudinal data show that consumers are still likely to spend more in the near future, consequent upon evident meagre resources occasioned by the COVID-19 pandemic.
To consumers, generally, the indications from prevalent economic environment, especially with the ramblings about petroleum supply and retail-end pump price portends despondency. Panic level among consumers has been aggressively heightened to a perilous level.
During the military era, petroleum pump price fluctuation was the norm, but that changed appreciatively when constitutional government replaced military governance. That change in political leadership brought some hope of a better consumer-experience, based on petroleum products supply, distribution and pricing with all its over-riding influence on consumption pattern in general.
According to the NNPC GMD, “today, PMS sells across our borders anywhere above N300 at any of our neighbours. And in some places, it is up to N500 and N550 to the litre. We are supplying almost everybody in the West African region, so it is very difficult to continue this because we have our own issues and that is why the eventual exit from this is completely inevitable”.
The resurgence in the price of crude oil bodes well for the Nigerian economy as this will boost the country’s revenue needed for the implementation of the 2021 budget, improve crude oil receipts and consequently bolster foreign exchange inflows.
However, the prolonged high crude prices would ultimately feed into a climb in petrol’s landing cost — meaning an increase in fuel price. This would further weaken the purchasing power of Nigerians who are already battling with high inflation, unemployment and stuttering economic growth.
Obviously, this situation will make life unbearable for consumers. Petty traders on their part, will as usual hike prices on account of hike in petroleum pump price, further compounding consumers’ woes. It is all a vicious circle playing out the multiplier concept.
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Now that this is happening and consumers are at the receiving end, regulatory agencies must rise up to the challenge in their role as watch-dogs. They must reflect on their effectiveness, and position to help ensure some stability, by doing the bits and pieces they can put together individually and collectively.
Whereas it is logically explainable that the retail trader will depend on the excuse of petroleum pump price increase to hike retail prices, it does not protect him/her from the consequence of that action. However, consumers can exert their powers to correct market manipulations that constitute consumer rights violation.
The Federal Competition and Consumer Protection Commission (FCCPC) should always be ready to act in defence of consumers. So the most-assured first step for consumers is to report any form of consumer rights violation to the Consumer Protection Commission, without exemption of any market segment or category. Consumers must know they have a ready protection as a starting point.
Oche Samson
