That Cut In Fuel Price

Minister of Petroleum Resources, Mrs.
Diezani Alison-Madueke, took Nige
rians by storm late last Sunday when she announced a marginal reduction in the pump price of Premium Motor Spirit (PMS), otherwise called petrol from N97 to N87 per litre. The Minister said that the new price regime takes effect from 12 midnight that day.
She further directed all filling stations across the country to comply by adjusting their pumps in line with the present reality, just as she charged all regulatory agencies, especially the Department of Petroleum Resources (DPR), the Petroleum Products Pricing and Regulatory Agency (PPPRA), and other agencies of government to monitor petroleum products marketers and filling stations to ensure total compliance.
Since the announcement of the cut in the pump price of petrol with effect from January 19, 2015, groups, individuals and key stakeholders, have continued to voice divergent views on the motive and indeed the propriety of the decision. Even organised labour under the Nigeria Labour Congress (NLC), Trade Union Congress (TUC) and other interest groups are not left out of the discourse.
While some welcome the gesture and rationalize it as government’s response to the yearnings of Nigerians, particularly because of the prevailing economic conditions, others think, and vehemently too, that the reduction in price by N10 is not proportionate to the huge fall in the price of crude oil in the international market.
Some persons insist that the fall in the price of crude oil should naturally trigger a reduction in the prices of all derivatives of hydrocarbons, including Automotive Gas and Oils (AGO), Dual Purpose Kerosene (DPK), and Aviation Fuels (Jet A and Jet A1), and not just PMS (Petrol).
While we commend the government for reducing the pump price of petrol, we wonder the parameters it used to arrive at the new price. It did not also let Nigerians know what to expect when the price of crude appreciates and whether government can again unilaterally increase prices.
Our first worry, however, was the failure of government to extend the price cut to other key derivatives of crude oil, such as DPK, AGO and Aviation Fuels. We believe that a reduction in the price of petrol, without a corresponding cut in the prices of kerosene, diesel and jet oils, may not affect the critical masses; particularly those in the rural areas and low income earners in urban centres who depend on kerosene for cooking. On the other hand, industries and manufacturers, whose economic contributions oil the wheel of development, as well as some key transporters and commuters, are left out as they depend largely on diesel that is not affected.
This is why we join other well-meaning Nigerians to call on the Federal Government to take a holistic review of the intervention measure with a view to further cutting the prices of all petroleum products across board. We also think that the review should be done in such a way that no iota of arbitrariness was allowed to permeate the process.
Even so, The Tide is particularly worried that under a regulated petroleum industry, where government regulates prices in consonance with a complex subsidy regime, a drop in the price of crude oil at the international market, resulting in unanticipated intervention of this nature, is not sustainable. We say so because crude oil prices fluctuate, depending on prevailing circumstances.
The real test is in the courage of both government and the people to deal with a sudden upward change on the product price. Should the government also raise price and on what terms; would the people trust government to raise price and without any yardstick, especially if the new price is high?
For us, the current situation provides an ample opportunity for the Nigerian people to rise up and call for the removal of subsidy on petroleum products, thus allowing market forces determine the prices of the essential products. Besides, a deregulated downstream sector of the petroleum industry would surely open the floodgate for the take-off of new refineries and petrochemicals facilities to add the much-needed value in the country’s economy.
In addition, a deregulated regime would create millions of new jobs for the teeming population of skilled and semi-skilled manpower, stop products importation, as well as eliminate corruption in the industry, thus saving trillions of Naira frittered away by a band of cabals, among other benefits. We think that this is the right way to go, if the present generation must move Nigeria to the next level.