Petrol subsidy withdrawal is a thorn in everybody’s flesh. It has spread its deadly fangs from Europe to Africa and is striking both the high and mighty, rich and poor in Nigeria.
With just a single stroke, the federal government has priced basic food items out of the reach of millions of Nigerians as pre-emptive withdrawal of petrol subsidy makes the cost of evacuating them from Nigeria’s inaccessible rural farms inauspiciously prohibitive.
The cost of a bag of plantain has risen from N3, 500 to N25, 000.
A medium size tuber of tasteless new yam now sells for N2, 300.
That yam leaves the farm at less than N500. Prohibitive transport cost, gratuitous levies by greedy market unionists and superfluous profit margin by retailers price it beyond the reach of millions.
Worsening poverty has added another inglorious toga to Nigeria’s list of negative firsts. It now has the world’s second highest number of malnourished children. That is the consequence of human-induced poverty in a richly endowed country.
The percentage of malnourished Nigerian children has risen from seven to 12 per cent. Impoverished parents can no longer feed their children.
The consequence is that Nigeria is breeding millions of children with disastrous intellectual deficit as malnutrition at the critical stage of growth inhibits mental development.
Petrol subsidy withdrawal has worsened Nigeria’s eternal darkness as it silences millions of micro and small power generators that accounted for 70 per cent of the electricity that powers Nigeria’s economy as public power remains epileptic.
Operators of European refineries are gnashing their teeth over colossal loss of patronage as the tripling of petrol pump price by the pre-emptive withdrawal of subsidy curtails consumption by the largest consumer of their products in The Dark Continent.
The Ngerian National Petroleum Company Limited (NNPCL), Nigeria’s fountain of duplicity in the petroleum industry, claims that petrol consumption has dropped by 40 per cent.
Unlike its claim that daily consumption now stands at 46 million litres, the actual figures may be perilously close to 20 million litres per day. Nigeria’s daily consumption was just a third of what NNPCL was treacherously deducting subsidy on.
Nigerians are groaning over the tripling of the pump price of petrol without effective palliatives. Even the smugglers who were feeding Nigeria’s tiny neighbours to the west with thousands of litres of petrol at 300 per cent profit margin are now groaning as President Bola Ahmed Tinubu’s pre-emptive strike on petrol subsidy makes the profit margin unattractive.
Forty-three million litres of petrol were not smuggled daily into five tiny West African countries as NNPCL claimed. As the Nigeria Customs Service (NCS) once angrily argued, close to 2, 000 trucks each with capacity for 33, 000 litres would have been needed to haul the contrabands to their destinations. The roads in Nigeria’s borders cannot contain that.
The road to the tank farms in Apapa Ports, Lagos, collapsed because it was pounded daily by less than 1, 000 fuel trucks.
The ones at the borders cannot withstand half of that traffic for two months. NNPCL was telling transparent lies.
The federal government itself is groaning over what is now generally accepted as a tactical blunder. Government has catastrophically entangled itself by mismanaging petrol subsidy withdrawal.
Ironically, it studiously defends its error even as it jitters over labour unions’ threat to make the country ungovernable if petrol price rises to N720 per litre.
Government brags that even at NN617 per litre, Nigeria still musters the lowest petrol price in West Africa. That may be true. However, those buying petrol at N1, 100 per litre do not generate electricity with petrol generators like Nigerians.
As the situation worsens, there are fears that government might slip in petrol subsidy through the backdoor to avoid a calamitous showdown with labour.
There are strong indications that rising crude oil price and a rapidly depreciating naira have combined to place the landing cost of imported petrol at par with the pump price.
Government might have silently instructed NNPCL to write off the excess cost to fend off street protests that could make the anti-SAS riots of 2020 pale into insignificance.
The federal government is responsible for the escalating poverty, malnutrition and deaths plaguing the land through pre-emptive withdrawal of petrol subsidy.
Through its failed war on corruption and obscene impunity, government has tacitly acquiesced the massive fraud that killed Nigeria’s four refineries. No one is punished for the crime.
Between 2011 and 2020, government spent N3 trillion in phantom turnaround maintenance (TAM) of the four refineries only for NNPCL to announce audaciously that they have not been serviced in the last 30 years.
Decades of duplicity and gross mismanagement has proved that NNPCL cannot manage the distraught refineries.
The prohibitive pump price of fuel can only be curtailed by selling the refineries to capable private investors who would manage them profitably. NNPCL is an incurable scammer. It cannot run the refineries profitably.
Besides, it is dangerous to rely on Dangote Refinery for ending Nigeria’s inglorious dependence on imported refined petroleum products. It would give one man unassailable monopoly in a crucial sector of the economy.
Some years ago, Dangote promised to crash the price of cement to N1, 000 per 50kg bag when he establishes solid control of the industry. Today he may be producing close to 80 per cent of Nigeria’s cement requirement but the price of the product has risen above N5, 000.
No one knows when his refinery will come on stream. One source argued that it may take another one year. Besides, he has maintained a curious silence on the possible price of products from his refinery.
If he obtains the monopoly that government is implicitly handing him, the prices of refined products from his plant may remain as high as imported ones. That is the conclusion one can draw from his control of the cement industry.
Government must strengthen competition in the downstream sector of the oil industry by privatisng Nigeria’s failed refineries and encouraging private investors to build more refineries.