By HON. YUSUF TAJUDEEN
Chairman, Committee on Capital Market & Institutions
Federal House of Representatives, Abuja.
Recall that on 8th January 2012, when the 7th House of Representatives had the historic Sunday – Plenary Session to deliberate on the planned removal of fuel subsidy by the immediate past government of President Goodluck Jonathan, I was privileged to move the Motion (along with 49 other Members) against the move.
Back then, I opposed the removal of fuel subsidy for various obvious reasons. Permit me to state unequivocally that, my opposition to fuel subsidy removal does not mean I am against Deregulation of the Oil Industry. However, I was opposed to the approach, style, timing and manner it was done.
For me, as it was in 2012, so it is NOW. I am not in any way opposed to the deregulation of the Oil Industry, but I sincerely have issues with the way and manner Federal Government increased pump price to N145 per litre from N86.50k.
With my background in Economics, I am aware that it does not make any national economic sense to subsidize consumption of a product like PMS. Rather it will make more realistic economic sense to transfer such subsidy to Agriculture, Transportation, Health and other Infrastructures – like it is done in developed economies such as USA, UK, China and Germany.
Indeed, other emerging economies like South Korea, Malaysia and South Africa have subsidy policies that are rolled out as palliatives to their citizenry.
Really, the Federal Government’s jerking up of the pump price of PMS without recourse to the Petroleum Product Pricing Regulatory Agency (PPPRA) – the Agency statutorily vested with such powers – is unconstitutional and ultra vires, since the Board of PPPRA is yet to be constituted, the action of Federal Government is illegal and can be challenged in Court.
Somehow, it does appear that the Federal Government is not inclined to widespread consultation on issues of national interest and thrives on foisting policies on Nigerians. The unilateral decision of jerking up the pump price is unprecedented, insensitive, anti-people and has further impoverish Nigerians.
The Federal Government’s action is a reflection of its insensitivity to the plight of Nigerians, which in a way suggest that it is out of touch with the unbearable and painful plight of ordinary Nigerians. The sudden increase of pump price is ill conceived, ill advised and ill timed, coming immediately after the signing of the Budget 2016 and implementation yet to commence.
The new pump price is unrealistic, unaffordable, unacceptable, unreasonable and absurd. The increase will lead to elastic inflation, cost of doing business will be higher, Ease of Doing Business in Nigeria will drop further, manufacturing will become non-attractive, there will be increased interest rate, scarcity of goods and services, downsizing of workforce in the public and private sectors, increased capital flight, emigration of Nigerians to other countries, general disenchantment by the populace, prices of foodstuffs will rise and numerous social challenges will spring up.
That private sector operators can now import PMS, makes it even more intriguing. What happens if the Importer’s cost is higher than the Federal Government stipulated limit price? Is the Importer expected to sell at a loss or would Federal Government pay for the price differential?
More shocking is the fact that government seems not to have appropriate foreign exchange policy. As at today, Nigeria has three variant Exchange rate viz:-
CBN rate – N199
Pump price rate – N285
Black market Rate – N360
Similarly, the logic that the lingering fuel scarcity was caused by non-availability of foreign exchange since the collapse of crude oil prices in the International Market, which led to the Central Bank of Nigeria pegging the official exchange rate to N197 to a dollar, is unconvincing and laughable.
With this new development, one can easily and quickly postulate that Importers will in the nearest future increase pump price again and again. Why? Since the new fuel pump price has ignited another round of free fall of the naira in the Forex Market; which may be above N400 to a dollar, Nigerians will be at the mercy of Oil Marketers who are mainly profit-oriented.
Perhaps, the Federal Government do not realize that with the new price regime, Marketers have been given the impetus to determine prices of PMS – which is not only inimical but detrimental to the socio-economic standards of Nigerians. Somehow, Federal Government’s new pump price is tantamount to a betrayal of trust reposed on it by Nigerians, who they promised to protect and improve their living standards.
With the sequence of events that culminated in the increased pump price, one is tempted to argue that neo-liberal forces appear to have taken over. If true, it portends more danger for the general wellbeing of Nigerians as more inhuman and anti-people policies may be introduced. Also the scarcity of PMS in the past three months may have been artificial, solely created to justify the removal of fuel subsidy.
It does appear that there are some individuals, groups, interests who leverage on the fraudulent template of PPPRA, by taking away our Commonwealth. Rather than make majority of Nigerians pay for the fraudulent practices of a tiny-few, I urge Federal Government to step up necessary mechanism to clean up the mess in PPPRA and other related Agencies. It is only when this is done that we can begin to see proper pricing of PMS.
Finally, let me reiterate that I am NOT averse to Deregulation, but it must be done with a human face – taking into consideration all necessary economic and social indices.