On Wednesday, members of the organized private sector expressed concern over potential business closures and job losses as a result of the increase in the pump price of Premium Motor Spirit, or gasoline, by the Nigerian National Petroleum Corporation Limited and fuel marketers.
The NNPCL and other oil marketers increased the price of gasoline on Tuesday from approximately N537/litre to between N617 and N630/litre. This move resulted in considerable outrage across the nation.
As a result of the Nigerian National Petroleum Corporation Limited and fuel marketers raising the price of Premium Motor Spirit, or gasoline, at the pump, representatives of the organized private sector on Wednesday expressed concern about possible business closures and job losses.
On Tuesday, the NNPCL and other oil marketers raised the cost of gasoline from about N537 per litre to N617–N630 per litre. There was a great deal of outrage about this action across the country.
“When fuel subsidy was removed, most people were of the opinion that the change that would occur was going to be a one-off change. If there was going to be any change, we expected little, not a skyrocketing one.
“The signal this gives to the business community is that – are we sure this is the final increase? Some of our members have tried to make some readjustments. This will make nonsense of the budget that we have done. We have said it severally, when it is difficult for you to operate, what happens next?
“If people are unable to come to work and you have to increase prices for consumers, what will happen? And where is the purchasing capability of the consumer to really purchase?” Meshioye stated.
The Deputy President of the Lagos Chamber of Commerce and Industry, Gabriel Idahosa, also spoke, warning that the rise in gas prices would bring about great difficulty for businesses, particularly in the near future.
Idahosa said, “In the near term, there will be a lot of hardship. A lot of small businesses will crumble completely. There will be a drop in production capacity. How fast we can get out of it is what the conversation is about now.”
Femi Egbesola, president of the Association of Small Business Owners of Nigeria, voiced concern on behalf of the organization that more companies will fail as a result of the harsher operating climate.
He claimed that raising the price of gasoline at the pump at a time when small businesses were already struggling due to the recent elimination of fuel subsidies was a “sledge hammer” that would destroy numerous SMEs.
Egbesola said, “It is a sledgehammer on micro and small businesses. I just wonder how we will survive. I must tell you I am confused. The economy has been in a basket, but this is suicidal. I foresee quite a lot of businesses going under. I don’t see how micro and small businesses can survive this. Many will go down.”
Also speaking, the National Vice President, Nigerian Association of Small Scale Industrialists, Segun Kuti-George, said the development would put further strain on businesses that were already grappling with increased costs associated with the government’s recent economic reforms.
He said, “It will bring additional burden on manufacturers who have to contend with the creation of alternative sources of energy to run their businesses. The only fearful thing for me is that our own case as a country does not obey economic theories. It doesn’t respond to market forces.
“It should not be an upswing all the time. If the price of crude in the international market comes down, it is expected that the pump price should also come down. But whether that will happen in Nigeria is a different ball game because whatever goes up, stays there.”
In the same vein, the National Vice Chairman, Nigeria Association of Small and Medium Enterprises, Solomon Aderoju, said more businesses would fold operations in light of the unbearable costs, which has been worsened by the increase in fuel price.
Aderoju said, “It will increase the cost of operations. Many SMEs are packing up already. MPR is 18.5. The rate of inflation is 22.79 per cent. So, no SME can thrive under this environment, with these kinds of government policies. More are still going to close down. I bought fuel for N14,000 today. It cannot last me more than a day or two. It will affect us tremendously. It is quite unfortunate.”
NLC convenes meeting
Also on Wednesday, the Nigeria Labour Congress said it would summon a National Executive Council meeting following the hike in fuel price.
Hakeem Ambali, the national treasurer of the NLC, communicated this information to one of our correspondents through text message.
In separate comments released on Tuesday, the NLC and Trade Union Congress, which make up organized labor, accused the government of stealing the poor to feed the rich. The government was charged by the congresses with breaking the terms of the agreements as well.
When asked about the next steps, Ambali responded that the NLC would call a meeting of the NEC. But he pointed out that no date had been set yet.
Hakeem Ambali, the national treasurer of the NLC, communicated this information to one of our correspondents through text message.
In separate comments released on Tuesday, the NLC and Trade Union Congress, which make up organized labor, accused the government of stealing the poor to feed the rich. The government was charged by the congresses with breaking the terms of the agreements as well.
When asked about the next steps, Ambali responded that the NLC would call a meeting of the NEC. But he pointed out that no date had been set yet.
Meanwhile, Lecturers under the aegis of Colleges of Education Academic Staff Union, on Wednesday, announced that their members would only go to their respective campuses twice weekly till the government addressed the issues caused by the removal of subsidy.
The union in a statement issued by its National President, Dr Sam Olugbeko, stated that its members could no longer survive on the current minimum wage, hence it had directed its members to only go to work twice weekly.
The statement read in part, “The national leadership of our great union in its extraordinary meeting held on Tuesday, July 18, 2023, agreed to direct its members to go to work two days weekly until Federal Government yields to its demand of 200 per cent increase in salary amidst the difficulty of members to get to work as a result of hike in the price of petrol.
“The implementation of removal of fuel subsidy by the Federal Government two months ago raised the price of a litre of petrol by 250 per cent. This worsened the inflationary rate on the cost of transportation, food and other essential commodities and impoverished the Nigerian people.
“Workers, including staff of Colleges of Education, kept faith with the government and chose to endure the untold hardship thinking it would be only for a while as the government promised to roll out palliative measures including significant increase in salaries.
“Alas! While our capabilities to sustain hope were already exhausted, the price of petrol rose further to N650 per litre. Now, the leadership of the union has been inundated by members’ complaints that they could no longer go to work as a result of hike in the price of petrol and resultant high cost of transportation.”
The union stated that “against this backdrop, it has become inevitable for the union to direct members to go to work only two days weekly, while an emergency NEC meeting shall be convened to ratify this decision and decide on the specific days of the week members are to go to work.”
Speaking on the way forward, the union called on the government to immediately seek a lasting solution to prevent a crisis in colleges of education.
Reps summon NNPCL
The House of Representatives rejected a motion to stop an increase in the price of petrol and revert to the old price of N537 per liter.
It resolved to investigate the sudden increase in the price of petrol and the resultant increase in transport fares across the country.
The House asked its committee to propose palliative measures to be taken to ameliorate the sufferings of Nigerians.
The House said since it had already resolved to investigate the increase, it would amount to pre-empting the work of the investigative committee by ordering the suspension of the price increase.
In a motion of urgent public importance by Ikenga Ugochinyere, the House asked the Group Managing Director, NNPCL, Mele Kyari, and oil marketers to appear before an ad hoc committee to explain the increase.
The ad hoc committee is also finding ways to ensure the effective distribution of palliatives to Nigerians to cushion the effect of subsidy removal.
Ugochinyere said section 88 (1) and (2) of the Constitution of the Federal Republic of Nigeria, 1999 (As Amended) empowers the National Assembly to conduct investigations into the activities of any authority executing or administering laws made by the National Assembly.
He also said further that Section 32 of the Petroleum Industry Act, 2021 saddles the Petroleum Midstream and Downstream Regulatory Authority with the task of regulating and monitoring technical and commercial midstream and downstream petroleum operations in Nigeria.
Naira devaluation
The crash of the naira against the United States dollar contributed significantly to Tuesday’s hike in the pump price of petrol, the Major Oil Marketers Association of Nigeria stated on Wednesday.
MOMAN specifically stated that the devaluation of the local currency led to an increase in the price of petrol by N100/litre, as it stressed that the cost of crude oil and the exchange rate accounted for over 80 per cent of the cost of PMS.
Speaking at a virtual conference, on Wednesday, organised by the association to explain the sharp rise in the cost of petrol from about N537/litre to N630/litre, depending on area of purchase, the Chairman, MOMAN, Olumide Adeosun, said, “In recent months, the price of PMS has remained relatively stable.
“On May 20, 2023, Platts reported a price of $827 per metric tonne, and on July 14, 2023, it was $859.25 per MT. However, there has been a significant increase in the foreign exchange rate.
“We can infer from our calculations in May that the Nigerian National Petroleum Company Limited determined its pump price using an exchange rate of about N630 to the dollar, while banks reported an exchange rate of approximately N650 on the Investors and Exporters window.
“As of today, the liquid exchange rate is close to N825 to the dollar. This devaluation adds N100 to the cost of importing a single litre of PMS into the country. Consequently, an increase in the pump prices of petrol should be expected.”
Adeosun reiterated MOMAN’s support for the policy of deregulation in the petroleum industry and acknowledged the challenges faced by the Nigerian public, adding that the group “extend our deepest empathy to all citizens during this time.”
He explained that the international price of crude oil and the exchange rate constituted the largest components of the cost build-up for Premium Motor Spirit, accounting for over 80 per cent.
“The remaining 20 per cent includes statutory dues, distribution costs, and margins. Deregulation promises a transparent and level playing field where cost-reflective prices are evident at fuel stations. It follows, therefore, that in a liberalised market, the pump price of PMS should accurately reflect the current economic realities,” he stated.
He further stated that in the spirit of transparency, MOMAN advocated for federal, state and local governments, as well as employers of labour to implement palliative measures to support less privileged individuals in society currently facing hardships.
The MOMAN chair said it was essential that rapidly executed palliative measures received wide publicity to alleviate the already agitated public sentiments.
“At MOMAN, we have always anticipated that the removal of subsidies and the stabilisation of the downstream market would be a gradual process.
“This process necessitates operators and regulators to engage the public transparently, earn public trust, and foster fair competition that ensures full value for customers at the fuel pumps.
Petrol sells N700
As commuters and drivers were hit by the abrupt increase in the pump price of gasoline from N530 to N700, there was a great deal of resentment in Anambra State.
In anticipation that the price may increase to N800 starting on Wednesday, drivers and other product users were swarming gas stations and buying the product in greater amounts at the time.
Before word of the recent hike in pump price spread around the community, our correspondent learned that the product was being sold at N530 per litre at the major gas stations in the cities of Onitsha, Nnewi, and Awka as of Tuesday morning.
Additionally, it was noted that in addition to NNPCL’s retail locations and those of other significant retailers selling petrol for N620 to N630 per litre
