Business Feature

Full deregulation: Paying high cost for failed govt policies

In this report, PAUL OGBUOKIRI captures the heartbeat of Nigerians on the rising price of cooking gas and the recent announcement by the Federal Government that it will by next year fully deregulate the downstream oil and gas industry by removing the subsidy of Premium Motor Spirit (PMS) and raise the pump price by over 100 per cent to N340 a litr

 

• More hardship over proposed N340 per litre PMS price

• Cooking gas, Kerosene, Diesel already deregulate

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• FG not sensitive to Nigerians’ needs –Experts

 

Malnutrition, civil war disease returns as Nigerians grapple with high cost of living At the Oyingbo food market, Lagos on Wednesday, Mrs. Enita Enrile, a mother of three had a piece of paper where she listed the food items (egg, beans, vegetable, milk etc) which a nutritionist,

 

Dr Emiolo Ogunsola at the Messey Street Children Hospital on the Lagos Island asked her to buy for her three-year-old baby boy straddled on her back.

 

The boy, according to her, has been diagnosed of malnutrition related diseases, a development, she said that she was not surprised of as her husband, the family’s breadwinner, a level 7 staff of the National Library of Nigeria’s monthly take home pay has long become insufficient for the upkeep of the family in a week. According to her, as moves from stall to stall pricing the goods, she gets more confused and feels like running away.

 

 

“But, can I be able to away from this sick one at my back, her two siblings at home or their father who surrendered his ATM card in the morning when he was going to work, to go and withdraw the entire N5, 000 in her account to go to the market and see what she can get for sick child and the rest of the family. “The price of everything is very expensive.

 

At N2, 500 for a crate of egg and one dozen of tin milk at N3, 000, N250 a tin; I cannot be able to solve the sick child’s problem or the rest of the family. I think I better buy three paints of garri at N3, 600 and 500 grammes of sugar for all of us in the family to continue to soak garri as we have been doing for recent months now. I leave the malnutrition diseases to God because there is nothing I can do about it.

 

The family income is static but the price of goods has continued to rise,” she lamented. “Every day, during consultation, there are five or seven children that suffer from malnutrition,” says Ogunsola, head of the nutrition department at Massey Street Children’s Hospital. “I bet in a few months or a year, more children will be malnourished.”

 

For many people, feeding the family has become a daily challenge, even before the pandemic and the surge in food costs, Nigeria’s nutrition figures were alarming: One in three Nigerian children suffered stunted growth due to bad diet; one in 10 is wasted.

 

As a result, close to 17 million children in Nigeria are undernourished according to statistics, giving the country the highest level of malnutrition in Africa and second highest in the world. For a country which was battered by the double economic impact of low global oil prices and the pandemic, the World Bank estimates Nigeria’s soaring inflation and food prices pushed another seven million people into poverty in 2020.

 

Food prices have increased more than 45 per cent since the start of the Coronavirus crisis, according to official statistics. Inflation is rising around the world as the global economy recovers from the Coronavirus pandemic, and while Western central bankers say it is only temporary, the soaring prices are having dramatic consequences in countries like Nigeria. Africa’s most populous nation, with 210 million inhabitants, Nigeria competes with India for the largest number of poor in the world.

 

According to the federal lawmaker, Senator Gershom Bassey, representing Cross River Southern Senatorial District, Nigeria is now the 2nd highest on the unemployment index globally.

 

“By fourth quarter of 2020, Nigeria’s unemployment rate increased to 33.3 per cent from 27 per cent and Nigeria now ranks 2nd highest on the unemployment global list and one in three of Nigeria’s 69.7 million workforce are unemployed, consisting of predominantly young persons aged 25-44.

 

“At a time the Federal Government should be considering an urgent intervention to get Nigerian youths gainfully employed is the time it chose to take an action that will worsen the unemployment situation. If the government goes ahead with the plan to increase the pump price of petrol from N165 to N340 a litre, most of the few employers of labour today will be out of production,” Senator Bassey said.

 

While before the pandemic, the number of poor Nigerians was expected to increase by about 2 million largely due to population growth, the number would now increase by 7 million – with a poverty rate projected to rise from 40.1 per cent in 2019 to 42.5 per cent in 2020. Senator Bassey averred that the rising cooking gas prices combined with underemployment or unemployment, declining purchasing power for individuals will compound the inflationary pressure.

 

He decried the high rate of youth unemployment in the country, saying from available statistics, over 55 million of them live in abject poverty.

 

“Nigeria’s current economic growth patterns are not providing adequate employment and quality of life, especially for young persons, who may lack necessary skills and training”.

 

Senator Bassey, who had a couple of weeks ago raised a motion in the Senate on “The Need to Prioritize Sustainable Youth Oriented Human Capital Development for Long Term Socio-Economic Growth”, said the need for sustainable programmes for youths development and empowerment in Nigeria is now to check current slide. He noted that, “food inflation has accelerated at its highest pace in 15 years, worsening the economic conditions of millions of Nigerian youths, of which more than 55 million now live in extreme poverty”.

 

Dashed hopes

 

Nigerians hope that the resumed GDP growth after a COVID-19 induced recession would translate into a fall in the country’s price inflation and rising cost of basic needs in the coming year, was recently dashed by the Federal Government, which announced that Nigerians should prepare for final removal of subsidy in Premium Motor Spirit (also known as petrol) with the price set to hit N340 a litre, over 100 per cent higher than the current pump price of N165 a litre.

 

This is coming on the heels of the seeming positive response by many Nigerian home to the Federal Government’s 10 year national plan to get 90 per cent of Nigerians to start using liquefied Petroleum Gas (LPG), also called cooking gas, other than cooking fuel, is turning anguish to the citizens as the prize of the cooking fuel suddenly started rising at a geometric progression.

 

A development the Minister of State for Petroleum, Timipre Sylva, claimed that the Federal Government is helpless about, saying the product was deregulated, as such the government will not intervene in to halt the rising prices.

 

 

A former Director General of Nigerian Maritime Administration and Safety Agency (NIMASA), now a commentator on public policy,

Dr. Dakuku Peterside, further dashed the hope of Nigerians on any form of reprieve by explaining that Nigeria imports over 65 per cent of the cooking gas in use in the country and like the imported Petroleum products (petrol, diesel and kerosene etc) which come with the added heavy costs of shipping and ports handling charges,

 

Nigerians are now paying for those added costs and the rising cost of gas in the international market. A People’s Democratic Party (PDP) chieftain, and a former Secretary to the Government of Imo State, Barr. Uche Onyeagocha, decried the incessant increase in the price of the cooking gas across the country to the detriment of the already downtrodden consumers. He lamented that the price of refilling the 12.5kg cooking gas cylinder which had been

 

 

between N3,200 and N3,500 for a very long time, suddenly jumped to N9,500, adding that 3kg camping gas cylinder, which used to be refilled with N1,200 now sells for N2,250.

 

He said in an interview with Sunday Telegraph that over 90 per cent of Nigerians will go into abject poverty if with rising prices of cooking gas, the Federal Government goes ahead to jack up the price of petrol by over 100 per cent as it has announced.

 

He said: “According to a report by the NLNG, Nigeria is blessed with abundant reserves of both associated and non-associated gas, estimated to be in excess of 202 trillion standard cubic feet.

 

The World Factbook, a reference resource produced by the Central Intelligence Agency, stated that Nigeria ranks ninth in terms of proven natural gas reserves in the world after Algeria. It was estimated that the reserve would last for over 100 years. “However, despite having the capacity to produce such quantities of LPG, it allocates only 350,000 metric tonnes to the Nigerian domestic market that requires about 1.2 million annually, while the rest is exported.

 

One wonders why the NLNG cannot fully supply the domestic market with the volume it requires.”

He recounted that while some end users, especially housewives and low-income earners, were left with no choice but to adapt to the situation by squeezing out as much, most rural dwellers and those in the hinterland who rely on the product for business have been forced to abandon their gas cylinders for firewood, charcoal, and sawdust despite the inconveniences and health hazards associated with their use.

 

According to him, it is needless calling on the government to repair the comatose four government refineries as it has demonstrated total incapacity to do so in its over six years in government, saying further that it will be wrong for the government to design any national policy based on the Dangote’s announcement of completion of his refinery next year as the Africa’s richest man had in the p`ast shifted the completion date of the refinery over two times.

 

“If they are hoping that when Dangote completes his refinery, importation of petrol will stop, they should wait till the construction is completed. Mind you, we heard that the refinery is being built in a Export Free Processing Zone.

 

We don’t know what will be the implication of that,” he said. For Iya Modinat, operator of a popular Amala Joint at Jakande Estate, Mile 2, the recent Federal Government’s policy on cooking gas for all is to blame for the recent sudden skyrocketing in the price of Liquefied Petroleum Gas (LPG), also known as cooking gas.

 

She expressed shock that despite the abundance and even flaring of gas by oil prospecting companies, Nigeria remains a net importer of cooking gas.

 

Recall that the Vice President, Professor Yemi Osinbajo, had assured Nigerians that the Federal Government has in place measures to ensure that cooking gas becomes affordable by providing five to ten million gas cylinders in the next one year. Speaking at the opening of a two-day National LPG Expansion Implementation Plan (NLEIP) sensitization and awareness campaign in Abuja,

 

Osinbajo said effective implementation of the NLEIP would move Nigerians away from using cooking fuel that are harmful to health and environment to cleaner and more efficient energy

 

Osinbajo, who was represented by the NLEIP Programme Manager in the Office of the Vice President, Mr. Dayo Adeshina, emphasized the need for all stakeholders to work together to ensure seamless implementation of the programme initiated to promote the use of LPG in the country.

 

Adeshina stated that the plan would be achieved through applying what he called 4As (Accessibility, Acceptability, Affordability and Availability). Why price of cooking gas may not fall soon Unfortunately, despite being a net exporter of gas and one of the few countries in the world after Russia that still flares gas, the Federal Government had recently declared that it has no control over rising prices of cooking gas in the country.

 

This came as President Muhammadu Buhari expressed concern over sundry developments, especially as the global market determines gas prices.

 

Explaining what was responsible for the spike in the prices of cooking gas and what the authorities were doing to address the situation, Sylva said that the government has no control over the price increase and cannot subsidise the product because it is fully deregulated. While stressing that gas prices are determined at the international market, the minister said the government is doing everything possible to bring down the price, especially during the Yuletide.

 

“And you all are aware that in Europe, today, gas prices have gone up. There was even a crisis in Europe relating to gas prices. So, the pricing of gas internationally also affects the price of gas in the country.

But Federal Government has pledged    to ameliorate pains of the rising cost of gas which has doubled by more than 100 per cent, and the petrol which it has announced will be fully deregulated early next year and the price set to hit N340 a litre. The government will give N5, 000 each to as many as 40 million people every month, beginning from July when fuel subsidies end.

 

A new petroleum law compels the government to allow market forces determine gasoline prices. The cash transfers will happen over a period of six to 12 months, Finance Minister Zainab Ahmed said recently.

 

However, Sheriffdeen Tella, a professor of economics at Olabisi Onabanjo University said that N5,000 monthly for 30-40 million poorest Nigerians is the laziest solution the Federal Government could proffer to the biting economic hardship Nigerians are already subjected to. “It is like taking the livelihood of someone and giving them a meal in replacement. It is really a pennywise- pound foolish gamble plan.

 

“N5, 000 transport fare cannot solve the damaging effect of N340 per litre of fuel. It is a poorly-thought plan that does not portray the interest of the common man. It is draconian, anti-people, and unacceptable, at least for now.”

 

Professor Sheriffdeen further said that the Federal Government is at a crossroads as it is faced with an economic decision which has a far reaching political implication.

 

He said aside the international angle to the rising price of gas, the devaluation of the naira is playing a major role in the rising price of the cooking fuel and also in the pump price of petrol. “While the production and shipment and handling at the ports are paid for in dol-lars, they have to be sold in naira at the value of the exchange rate.

 

The solution to this is domestic production and refining of the petroleum products by the government’s four refineries, but it is obvious that successive governments in the country have demonstrated lack of interest in reactivating the refineries.

 

However, the worst disservice to Nigerians is the importation of LPG when Nigeria is a major exporter of Liquefied Natural Gas and flares huge amounts of gas daily,” he said. Expectedly, the Nigerian Labour Congress has condemned the planned increase in the pump price of petrol.

 

In a statement, its president, Ayuba Wabba, said “the contemplation by the government to increase the price of petrol by more than 100 per cent is a perfect recipe for an aggravated pile of hyper-inflation and astronomical increase in the price of goods and services”.

 

“This will open a wide door to unintended social consequences such as degeneration of the current insecurity crises and possibly citizens’ revolt.

 

This is not an outcome that any sane Nigeria wishes for,” Wabba said. We all remember the #OccupyNigeria protest of 2012, and the #EndSARS protest of 2020. The government should avoid pushing its citizenry to the wall.

 

Meanwhile, a Nigerian Journalist, Isreal Ojoko, has advised the government that instead of increasing fuel price to N340 and paying N5,000 transport fare a month to 30-40 million Nigerians, it should be removing N5,000 monthly from the salary of every working Nigerian collecting N50,000 and above, and reduce petrol price to N100 per litre. It is a fair deal.

 

“I am willing to sacrifice N5, 000 monthly to make life bearable for millions of others,” he said.

 

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