Fuel Price Increase: The Confusion, the Deception and the Lies

Ibrahim Dan-Halilu

Readers must forgive me for choosing the three nouns above to describe the recent increase in prices of petroleum products in Nigeria . I have no better and simpler words to paint a clear picture of the situation to Nigerians. The increase, the manner it was presented to consumers of petroleum products and the reactions from various quarters to the increase suggest no better description. But even this defends on which side of the argument one belongs.

This Day of Wednesday June 9 captured the picture of the situation quite succinctly when it captioned its story “Confusion over Fuel Price.” What This Day and other press did not however explain was the person or group responsible for the confusion because it appeared that even Justice Roseline Ukeje of the Abuja High Court who gave the famous ruling of June 8 was unsure of what the status quo meant as ruled by another Abuja High Court Judge in February. The President of the Nigeria Labour Congress, NLC Comrade Oshiomole too seemed confused about what he wanted for the Nigerian workers and citizens generally because the strike was called off in less than 72 hours after the ruling of June 9. At that time many of the petrol service stations were still selling fuel at close to 50 per litre while some few others had reduced the price to between N45-48. Even in Abuja and Lagos where Adams Oshiomole claimed that marketers had complied with the court order fuel was either sold at between N45-48 or the service stations had closed down “to avoid incurring loss.”

One may want to ask a very pertinent question. What is the pre-February price of petrol in Nigeria ? What was the content of the court order issued in February? What is the operational definition of the status quo for both the NLC and the federal government? Unless we find answers to these questions we run the risk of confusing everybody, including the consumers of fuel. My understanding is that the pre-February price of fuel is N43 per litre in Abuja and most other cities not the N38 insinuated by antagonists of fuel price increase. One will recall that what led to the first round of the strike in February was the N1.50 fuel tax introduced by government which led to another round of increase in fuel price in four months. The two warring factions (not the court) therefore must define the status quo unless a specific prayer was requested.

Perhaps, most of the blame for the confusion was caused by media reports. Some reporters might be carried away by the Lagos price of N39.50 after the imposition of fuel tax (N1.50) in arriving at the N38 per litre. But this was not a general price. It was not even a regional one because as at then even neighbouring states of Oyo, Ogun and Oshun were not buying fuel at the Lagos price. Unless there is a contrary position, the assumption is that courts do not normally grant prayers that were not sought for. This presupposes that the NLC prayer was for the court to demand the federal government to revert to N43 per litre not the negotiated N38 per litre.

In this case, there is a case of deception against the government over the pre-February pricing because the impression was that NLC had carried the day by negotiating a reasonable price. But in the end the fuel price never come down to the level expected by Nigerians. In this case, one may wonder why the NLC suspended the first round of strike even as its negotiated price was not accepted or rather applied by both Nigeria National Petroleum Corporation, NNPC and other marketers of petroleum products.

Oshiomole may defend the NLC position on the basis of the February court order. But has the federal government fulfilled its own part of the court order? For most Nigerians it did not because it never reverted to old price of products. So, why the capitulation? This is where the issue of deception arises. Much as I do not like to level Oshiomole and his colleagues in the NLC Central Working Committee and the Federal Executive Council as rebels, I think they have not pursued their case to logical conclusion. Perhaps, they were pushed by pressure from community leaders, especially traditional rulers, and public apathy to the impact of the strike, in suspending the longest national strike over fuel price increase. That being so, if I were Comrade Oshiomole I will take the tough decision of accepting the recent increase as a fait accomplish or resign my leadership of the umbrella labour union.

Taking the latter would have been the most honorable thing to do because careful analysis of the February strike will reveal that the NLC achieved nothing compared to the gross loss in work hours and general hardship the strike inflicted on many citizens. Secondly, with the kind of civil society groups and citizenry we have, it is preposterous to expect the NLC to win any battle against the mighty federal government. It may end up fighting its battle alone and suffering the defeat alone as others that fought oppressive regimes in Nigeria did in the past. Already, there are discordant voices condemning the NLC for calling another strike and accusing the leadership of being settled.

But if, on the other hand, Oshiomole chooses to push further and pursue the legal tussle to the end, the bitter truth is that favourable as any court order may be to the NLC, it can not be enforced because Oshiomole has no security operatives to prosecute offending marketers or to cause government to obey the order. So, why seek a court order that could not be enforced? Why not take the bow and allow Nigerians to continue with their suffering since that is what they chose for themselves? In accepting the new price regime of N52 per litre the NLC will be faced with an in-house rigmarole from those that perceive Oshiomole as a close friend of the government. In other words, whichever position he takes between the two extremes, Oshiomole will not be free from blame and accusations. But sometimes, it is wise to be realistic and be read as a fool by those you lead. In the end, posterity may judge you right.

Oshiomole should take a realistic position on the fuel crises. There is no doubting the fact that price of crude has risen in the world market. And there is no doubt that half of the fuel we consume is imported from oversea. That being so, marketers are buying the refined oil at a higher price than the crude we refine in Nigeria . So, why forcing them to sell at lower than the cost price? To answer this question, one must also raise some pertinent questions. What is the true cost price of imported fuel? What is the genuine subsidy paid by NNPC for fuel imported by the corporation? What is the profit margin for the NNPC if it subsidizes the whole 300 million litres of oil per day that we need for domestic use? Is it beyond the powers of the National Assembly to appropriate fund for fuel subsidy to address the imbalance or additional burden imposed on marketers of products?

While we await answers to these questions the issue of purchasing power of Nigerians too must be addressed, if indeed government desirous of having a genuine and acceptable fuel deregulation policy in Nigeria . Our deregulation will turn to lawlessness unless citizens can have wages that will meet their basic needs. If governments at all levels can guarantee this, then no Nigerian will object to the operations of market forces in our economy. Because market forces also mean that if the prices of items in the market go up wages must also be raised to a level that can ensure workers purchasing power is not strangulated to a level of slavery. This is the issue that the NLC leadership should have addressed with government and other employers of labour. I don’t expect Oshiomole to fold his arms and allow the increase to go unchallenged. But I believe he is taking his war to the wrong quarters. Marketers may have their unethical practices but they are not solely responsible for the imposition of new price regime otherwise, why the benign refusal of the police authorities to enforce the court order?

The Petroleum Products Pricing Regulatory Agency, PPPRA and NNPC too is a culprit in this deception because while the former has not been vigilant enough to monitor the distribution of petroleum products imported by NNPC and the sell of products by marketers, the NNPC never supplied Nigerians with records of distribution of the products. There is complete lack of transparency in the importation, distribution and sale of the products, which gave both the NNPC and many marketers the leverage to distribute the products unevenly and sell above the regulated prices. This is where the NNPC claim of spending 500 million Naira daily on fuel subsidy sounds hollow.

Much as the subsidy might have mitigated the scarcity of products the direct beneficiaries have been the marketers because none of them sell their product at any reasonable price differential as to offer consumers reasonable relief. For instance, since the commencement of deregulation Nigerians have not seen a price differential of up to N2 per litre. But in one fell swoop every marketer was rushing to increase the price of product by N9 per litre because of a rise in price of crude at the international market. My question here is; What guarantees do Nigerians have that a fall in price of crude will cause a fall in the price that they buy fuel since both PPPRA and the government seemed to have differed with the public in their definition of deregulation? Why should the PPPRA wait for the judiciary to issue order before sanctioning the marketers, if its responsibility is to monitor pricing? Where was Chief Gbadamosi and members of his team when the marketers silently adjusted their fuel pump price to over N52 per litre?

I regarded the federal government’s stance on the increase as stark deception because it has not in any way supported the judiciary in enforcing the court order issued by Justice Roseline of the Abuja High Court even as it controls the police and other security agencies. If judicial measure cannot reverse the position of the oil marketers should the PPRA, the NNPC and the federal executive not chart a political solution to the issue by inviting all stake-holders to a dialogue? The implication of the current court order and the subsequent refusal of the marketers to obey the order would be anarchy. For one, the marketers, especially the major ones, will close shop and wait for such a time when the price of crude falls in the world market. They can channel their fund to exploration or other petroleum-related services. The independent marketers, on the other hand, may stay in business but devise various means to recuperate the loss incurred in selling their products at the imposed prices. Besides adjusting their pump metres, which is a very common practice, they may go into sophisticated adulteration and diversion of products to black market outlets. This will bring us back to the ugly days of the Abacha and Babangida administrations when Nigerians were forced to buy nauseating products that not only caused health hazard but also led to breakdown of vehicles.

The federal government has several options if it really wanted to resolve the dispute and restore sanity in our petroleum industry. First, it can revise the deregulation policy to accommodate some peculiar circumstances like world oil crises. The excess from sale of crude about ($18 per barrel) should be used to subsidize the importation of products. To sanitise importation by marketers, a comprehensive screening should be conducted to select competent marketers that will import the product and sell to consumers at reasonable prices as determined by both PPPRA and NNPC.

Secondly, the second phase of deregulation must be implemented. Every major marketer should be given specific time-frame to build their refining plant or have their import license withdrawn.

Thirdly, the NNPC should build more mega petrol stations in all state capitals and major cities to create healthy and reasonable competition and offer other Nigerians the benefit of government subsidy on fuel.

As a permanent measure, the federal government has to revive the four refineries to perform optimally so that the level of importation of petroleum products will be reduced to barest minimum. At least the four refineries can refine 80 per cent of our domestic need, if put to optimal use. This is not expecting too much from a government that has expended over 200 billion Naira on unprofitable ventures like the construction of the National Stadium, Abuja , the CHOGM, COJA Games, and National ID Card project.

The NLC should rather understand that strike or stay at home is no longer fashionable in labour - government relations. What works in most developed economies is dialogue and negotiation for wage review. From public opinion on the last strike action the NLC leadership should understand that Nigerians are not prepared to suffer for any strike again. The NLC should leave that job to the Civil Society Groups while it pursues genuine interest of workers. Oshiomole must understand that most Nigerian families get their daily meals only when their breadwinners come out of their homes to various work places or service spots. The NLC members represent less than 10 per cent of the population. It is undemocratic to shut down everyone else simply because 10 per cent of a population is protesting poor government policy. More so, when such shut downs only lead to more hardship with little gain in return.

Ibrahim Dan-Halilu

10 Alkali Road

Fuel Price Increase: The Confusion, the Deception and the Lies

Badarawa-Kaduna