The removal of the fuel subsidy does not come as a shock to Nigerians for the fact that fuel queues, though have disappeared, still but prices of the product remain high pan- Nigeria in the past eight weeks. From many quarters, Nigerians have described the removal of the subsidy by the federal government as a healthy move for a nation currently going through economic hardship.
The price of the product is raised by 67 percent as the President, Muhammadu Buhari’s and his cabinet moved to tackle months of shortages in the supply of fuel, which further proven that the fuel subsidy is not sustainable in the face of flagrant disregard by the marketers of the set Petroleum Products Pricing Regulatory Agency (PPPRA) ceiling price of N86.50k/ltr.
Petrol is now expected to be sold between N135 and N145 per litre according to a pricing template released yesterday by the Petroleum Products Pricing Regulatory Agency (PPRA) in the country. This will affect the prices of many goods and products in the country as about 170 million Nigerians are expected to bear the impact of the rise from the previous limit of N87 naira per litre.
The Petroleum Minister of State Ibe Emmanuel Kachikwu said on Wednesday in an e-mailed statement. Any Nigerian “entity” is now free to import fuel and sell subject to meeting regulatory requirements.
The minister further stated that “We expect that this new policy will lead to improved supply and competition and eventually drive down pump prices,”
Nigeria, a major crude exporter, relies on fuel imports to meet more than 70 percent of its domestic needs with four state-owned, ill-maintained refineries working at a fraction of their combined 445,000 barrels per day capacity. Higher fuel prices are expected to encourage private investments in refineries and boost domestic supply, the petroleum ministry said.
However, the president had earlier contended that removing a cap on pump prices would hurt Nigerians. With the government unable to meet the foreign exchange needs of importers at a time where low oil prices had eroded export income, the shortages of fuel which have been endured for weeks has forced consumers to pay more than double the earlier (N87) official price.
The major Fallout on the deregulation and the subsidy removal according to analysts is that as the government quarterly import quota may cease, retailers will be allowed to import the product so that many independent marketers, who had stayed away from the market will make a return into “the game”.
According to Olumba Obinna Anayo, a business mogul, “the removal of the subsidy became apparent as the government could not wrestle down the cabals involved in subsidy scams that make life unbearable for the citizenry and horde the product anytime the government is not dancing to their tunes.”
The Deregulation will bring competition and healthy rivalry into the industry. Moreover, some of us have been buying this product in the region (South-west) at that price, so why not make it official so that the product will be available? I think it is a tough decision to take, but I applaud PMB for the boldness to take such decision” said Obinna
Pricing trend in the past 12 months demonstrates that Citizens in areas other than Lagos and Abuja have consistently paid 20 – 50 percent more for fuel purchased at the pumps. Survey by NBS indicates that apart from the Federal capital and Lagos, Citizens continue to pay for fuel at an average price of N150/ltr before the subsidy removal was officially announced. The survey establishes that the subsidy benefits only a few, especially urban – metropolitan and few higher income groups as opposed to the larger citizenry.