President Bola Tinubu has defended the recent increase in the price of Premium Motor Spirit (PMS), commonly known as petrol, by the Nigerian National Petroleum Company Ltd. (NNPC Ltd.).
The price hike, which saw petrol prices rise from N568 to between N855 and N897 per litre depending on the location, has been met with widespread criticism and public outcry.
Context of the Price Increase
The price increase was announced on Tuesday, September 3, 2024, amidst severe fuel scarcity across the country. Many private suppliers have been selling fuel at even higher prices, with some charging up to N1,200 per litre. The NNPC Ltd. had previously acknowledged financial difficulties that were affecting their ability to maintain fuel supplies.
Presidential Defense
Addressing members of the Nigerian community in China, President Tinubu emphasized that Nigeria is undergoing significant economic reforms aimed at boosting the country’s potential. He argued that these reforms, though challenging, are necessary for Nigeria’s development, particularly in areas such as infrastructure, electricity, and water supply.
“Nigeria is going through reforms, and we are taking very bold and unprecedented decisions. For example, you might have been hearing from home in the last few days about fuel prices. But, can we help it? Can we develop good roads like you have here? You see electricity being constant in quantity and quality. You see water supply, constant and running, and you see their good schools. And we say we want to hand over a banner without stain to our children?” Tinubu stated.
Deregulation of the Petroleum Industry
The President’s comments follow a directive to Vice President Kashim Shettima to convene a meeting with key stakeholders, including the Minister of State for Petroleum Resources, Senator Heineken Lokpobiri; the Group Chief Executive Officer of NNPC Ltd., Mele Kyari; the National Security Adviser, Nuhu Ribadu; and the Executive Director of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Ogbugo Ukoha.
Lokpobiri explained that the petroleum industry has been deregulated following the passage of the Petroleum Industry Act, allowing prices to be determined by market forces of demand and supply. He clarified that the federal government no longer fixes prices for petroleum products, and the current prices reflect market dynamics.
Regulatory Efforts to Stabilize Supply
The NMDPRA Executive Director, Ogbugo Ukoha, assured that all regulatory efforts are focused on stabilizing fuel supply. Initiatives include extended operating hours at depots, prompt clearance of vessels, and increased support for local refineries to boost production and stabilize prices.
Ukoha stated, “All regulatory efforts are now geared towards stabilizing supply, and we believe that it will be positive on the stability of price. The regulator has ensured that there are increased operating hours from all depots, vessels are being cleared promptly, and extended hours where safety can permit for truck-out as well. More importantly, is the reinforcement of the support being given to local refineries because with increased production from them, indeed there will be higher supply which will stabilize the price.”
Public Reaction and Economic Impact
The fuel price increase has led to significant public discontent, with many Nigerians expressing frustration over the rising costs of living. The Nigeria Labour Congress (NLC) has called for an immediate reversal of the fuel price hike, citing the exacerbation of hardships faced by Nigerians.
Transport fares have also surged in response to the fuel price increase, further straining the economic situation for commuters. The Peoples Democratic Party (PDP) has condemned the price hike, describing it as a “brutal assault” on Nigerians and accusing the APC administration of being indifferent to the public’s struggles.
As Nigeria navigates these economic challenges, the government’s commitment to bold reforms and market-based pricing mechanisms remains a contentious issue, with many questioning the immediate impact on the welfare of citizens.
