Following another increment in pump price of Premium Motor Spirit (PMS), otherwise known as petrol, to N151.56 per litre, yesterday, members of the organised private sector (OPS) have said that the decision is inimical to businesses in the country.
The OPS said for full deregulation in the downstream sector to exist in the country, it must come with regulated price control mechanism for Nigerians to benefits. Also, the OPS added that the hike could further spike inflation as businesses battle rising cost of running business with regard to purchase of raw materials for production. In addition, they pointed out that the hike would have severe implications on businesses, particularly Micro Small and Medium Scale Enterprises (MSMSE) that depend on PMS to power their generators to augment electricity supply.
The Manufacturers Association of Nigeria (MAN) and Lagos Chamber of Commerce and Industry (LCCI) said the consistent increases in the price of fuel by Pipelines and Product Marketing Company (PPMC) in line with full deregulation in the downstream sector would have cost implications for the economy if it is not controlled in line with global oil price market. They, however, said that they were in total support of full deregulation in downstream sector of the economy because of the socalled fuel subsidy, which was marred by corruption.
The private sector investors insisted that it was time for the Petroleum Industry Bill (PIB) to be passed by the National Assembly so as to open up more investment opportunities for oil firms to start refining locally. Acting Director-General of MAN, Paul Oruche, while speaking with New Telegraph, said that full deregulation in the downstream sector came as a result of COVID-19, saying that it will bring the muchdesired price control of PMS and other products as time goes on. Oruche said that it was better for the current administration to put the country’s refineries in shape to address issues of refining and cost implications locally. “PMS prices fluctuate just as the price of AGO, which had been deregulated over a long time. The market forces determine the price, but what government is trying to do is to control the hands of the market forces by not taking away cost of PMS beyond what it should be.
On his part, the Director- General of LCCI, Dr. Muda Yusuf, explained that the increase had shown that President Muhammadu Buhari’s administration has finally removed fuel subsidy, considering the impasse caused by COVID-19 on oil revenue. Meanwhile, Chairman, Oil and Gas Sectoral Group of MAN, Dr. Micheal Adebayo, raised the alarm that the hike would further spike up the price of gas in the country.
He said that many manufacturers had shifted to gas as alternative power generation for production since they cannot depend on electricity from the national grids. Adebayo said: “We have been complaining that we are being charged in dollars for consuming gas locally and nothing has been done to reverse the ugly trend.
I have been complaining about this over the years to the parent organisation (MAN) for a very long time that the trend should be reversed, and for government to look into it. “It is very painful that gas, which is gotten from our soil, is being sold to us in U.S. dollars. We are being charged according to the exchange rates. Now that the exchange rate has gone up, following the technical devaluation of the naira and scarcity of forex, the increase has come again when we are asking for what palliative the government should give us to cushion our situation, and to enable us pay salaries, gas bills and offset some bills that accumulated during the lockdown. “We were also looking at the government to give us some relief for one year or more, but what we are getting is increased gas price. This is not done in any part of the world, it is only in Nigeria that this is happening and it is quite unfortunate.”