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Friday, May 13, 2016

THE NEW FUEL REGIME AND THE IMPLICATIONS

Photo credit: allnewsandreports.com
When the budget was signed last week, President Muhammadu Buhari made it known that he shares in the plight of Nigerians. However, the announcement by the Minister of State for Petroleum, Ibe Kachukwu today is contrary to the statement and the anticipated promise of change by Nigerians is further shattered.

Petrol in Nigeria has been fully deregulated and it would start selling at not more than N145 per litre from N86.50. This implies that everyone can import standard fuel into the country and sell at a profitable rate. This pronouncement made Nigerians skeptical because during the 1st town hall meeting of the Federal Government held in Lagos told Nigerians that the refineries have started working again. This reduced the anxiety of Nigerians who have long been held "hostage" by fuel scarcity. If the refineries are working why can't there be optimum production to ease the suffering of Nigerians?

Prices of virtually every commodity has gone up since the period of fuel scarcity prior to the complete removal of subsidy and this is a "license" to increase prices at 100%, moreover the battle for the soul of dollars has also placed significant pressure on a consumptive economy like Nigeria. Equally, salaries have not been increase to catch up with the economic realities of this time. Although the labour unions have started demanding for an increase in minimum wage to N56,000 from its current N18,000 which some state governments cannot pay at the moment.

While the fuel scarcity persisted, economic analysts speculated that the it was a ploy by the petroleum marketer to cause artificial scarcity so that they can optimally gain with the hoarded stock. However, the price at the international market is still very low compared to the price increase that is being experienced.

The increase in fuel pump from 1973 when it increased from 6k to 8.45k till 1993 when it became N5. Even in year 2000, it was N20 per litre. Ironically, President Olusegun Obasanjo kept increasing the amount till it became N75 in 2007. The administration of President Goodluck Ebele Jonathan increased it to N141 in 2012 and this led to an uprising by the labour union and his administration was forced to reduce the price to N97 before it dropped to N86.50 due to crash in oil prices in the international market.

The eyes of the common man on the street is fixed on the outcry of the labour unions to salvage the situation now that the economy is in a comatose. Artisans and Micro Small and Medium Enterprises (MSMEs), the powerhouses of the economy, cannot work because there is neither electricity nor fuel, as such, the economy will be grounded.

As it is all struggles at the moment for Nigerians, there is a need for an overhaul of our systems so that coming generations can be liberated from this ownership of crude oil amidst the tale of endless woes for Nigerians. Alternative sources of energy is the way forward for the country at large.  
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