Fuel Price Reduction: Why FG Should Do More

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By Juliet Alohan

Considering developments in the global energy market which necessitated the recent slash in the price of fuel from N97 to N87 a litre, there is the wider view that the reduction is inadequate in view of the fact that oil price has fallen by over 50 per cent since last June.

While Nigeria’s N10 slash translates to 10.3 per cent, in the United States, the price of a gallon of petrol has dropped from $3.96 to $2.29 while in the United Kingdom (UK) the price has been cut by 20.8 per cent; even China, an oil import dependent nation, has reduced its petrol price three different times since crude price began tumbling.

Consequently, there have been calls on the government to present to Nigerians the rationale behind the N10 slash even as there are mounting pressure on the need to extend the price reduction to kerosene and diesel.

In his reaction, the acting national coordinator of a leading human rights organisation, the Committee for Democracy and Rights of the People (CDRP), Comrade Saka Waheed, questioned the economic rationale behind the federal government’s reduction of the price, insisting that the decision is parochial and politically motivated.

He said even at N87 the price is still arbitrary in the face of a near worthless global oil, adding, “The natural economic expectation is that the price of petrol would drop in conformity with the current global fall in the price of the commodity,” while arguing that a more appropriate price would be N65.

Also reacting to the development, the Nigeria Employers’ Consultative Association (NECA) stated that government should have seized the opportunity and go a step further to address the fundamental issue of appropriate policy framework that will promote investment in the downstream sector of the oil and gas and “put a stop to the embarrassing and shameful practice of fuel importation.”

According to NECA’s director-general, Olusegun Oshinowo, the current decline in the price of crude oil is an opportunity government should seize to commence the implementation of the policy on deregulation of the downstream oil and gas sector.

“This is a unique timing the government cannot afford to miss as full implementation of deregulation, which in time past had led to price increase and reaction by the labour movement by the way of industrial action, does not have any negative effect on the masses,” he said.

He further added that “it is a surprise that government’s announcement was limited to just the reduction in the price of fuel as one would have expected a far more holistic announcement of a new policy thrust of deregulation and privatisation of the four refineries which have now become a sink-hole.”

Meanwhile, a timeline of fuel price reviews showed former president Olusegun Obansajo’s administration with the most reviews. On June 1, 2000, he increased fuel price from N20 to N30 a litre, but the price was later reduced to N22 on June 8, following a protest. His administration saw several other increases: on January 1, 2002, the price increased to N26 then to N42 in October 2003. It rose further to N50 in May, 2004, then to N65 in August of the same year.

Just two days before handing over to the late president Umaru Yar’Adua, on May 27, 2007, Obasanjo further increased the price of fuel to N75 a litre. But the Yar’Adua administration eventually reduced the price to N66 in June 2007.

The price remained unchanged until the Jonathan administration attempted a full deregulation on January 1, 2012, which saw the price drastically rise to between N138 and N250 a litre in different parts of the country, sparking a nationwide protest and industrial action until the decision was reversed and the price fixed at N97 on January 16, 2012.
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