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Fuel Price: Reject World Bank N750/Litre Proposal, NLC Warns FG

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11 months ago

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The Nigeria Labour Congress (NLC) on Thursday cautioned the Federal Government against implementing the World Bank recommendation of increasing the pump price of Premium Motor Spirit (PMS), otherwise known as petrol or fuel to N750 per litre.

The World Bank had on Wednesday, asked the President Bola Tinubu-led government to stop the subsidy payment on petrol and raise the cost of the product to N750/litre.

It said the Federal Government might still be paying the subsidy as fuel prices in Nigeria were currently not cost-reflective, stressing that Nigerians should pay about N750/litre for PMS as against the current price of N650/litre.

This came as oil marketers explained that the cost of PMS should be around N1,000/litre had it been that the government not subsidising the product.

But the government, on Thursday, denied the claims of marketers and the World Bank as regards the reintroduction of subsidy on petrol in Nigeria.

The World Bank, on Wednesday, asked the Federal Government to stop the subsidy payment on petrol and raise the cost of the product to N750/litre.

It said the Federal Government might still be paying the subsidy as fuel prices in Nigeria were currently not cost-reflective, stressing that Nigerians should pay about N750/litre for PMS as against the current price of N650/litre.

The World Bank’s lead economist for Nigeria, Alex Sienaert, alleged the continuous payment of petrol subsidy by the government in Abuja during his presentation of the Nigeria Development Update, December 2023 Edition.

“It does seem like petrol prices are not fully adjusting to market conditions. So, that hints at the partial return of the subsidy if we estimate what is the cost reflective of the retail PMS price of the would-be and assume that importation is done at the official FX rate.

“Of course, the liberalisation is happening with the parallel rates, which is the main supplier, the price would be even higher. These are just estimates to give you a sense of what cost-reflective pricing most likely looks like.

“We think the price of petrol should be around N750/litre more than the N650/litre currently paid by Nigerians,” he stated.

 

Reacting to the statement of the World Bank, the labour movement declared that a further hike in the price of fuel would be an automatic invitation to anarchy.

The NLC’s Head of Information, Upah, described the World Bank as a predatory institution that does not care about the welfare of Nigerians, stressing that the initial increment in the pump price of PMS had caused enough problems in Nigeria.

“The World Bank is globalist north in thoughts and actions and has little or no consideration for the global south. It is a predatory institution that the global north uses to justify its crimes against the south.

“It is almost single-handedly responsible for the ruination of the economies of countries of the global south for which it prescribes one solution for all ailments.

“It does not care what happens to Nigeria or Nigerians so it could from its perch in Washington say whatever it likes or push around our leaders like house helps.

“The truth, however, remains that the present regime of the pump price of PMS has all but destroyed the country. To now ask the government to raise it to N750/litre is to invite anarchy upon the land.

“The World Bank is so hypocritical it fails to see the nexus between price and capacity. The minimum wage in Nigeria for a privileged few is N30,000. The same minimum wage in the United States where the law is enforced is N1.5m.

“In light of this, if the government knows what is good for it, it should ignore the World Bank but must remain committed to fighting inherent corruption in the downstream sector of the petroleum industry. It must also cut down the high cost of governance.”

But the Federal Government denied the claims of the World Bank on the continued payment of the fuel subsidy on petrol.

In an interview on Channels Television on Thursday, the Minister of Information and National Orientation, Mohammed Idris, said President Bola Tinubu had made it clear from his first day in office that his government would not sustain the payment of subsidy on petrol.

According to Idris, the removal of the petrol subsidy had led to an increase in the revenue accruing to the Federation Account.

“Subsidy is gone, and the President told Nigerians from his first day in office that there won’t be subsidy (on petrol). It is because subsidy has gone that we have so much money available for the government to do so many things. Of course, it’s never enough, but fuel subsidy is gone and it’s gone for good,” the minister stated.

He added, “There are instances where the government needs to come in to see that things don’t go so bad. That’s the responsibility of the government. Every rule will also have its self-adjusting mechanism, but I can assure Nigerians that the subsidy is gone.

“If you look at the monies accruing to the Federation Account and the kind of money the states are receiving, you would know that everybody desires that subsidy should go. What do we do with that subsidy, I think, is the next question. We need to scrutinise that so that Nigerians would benefit from the subsidy that has been taken away. Subsidy is gone.”

Reacting to the argument by the Federal Government that the petrol subsidy had gone, the National Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chief John Kekeocha, said this was not true.

Kekeocha said the government was afraid that the removal of the subsidy would lead to unrest.

“It is funny when government personnel who don’t know the realities on the ground come to the open and mess the government up. How can you say that the subsidy is gone? No reasonable person who knows the dynamics of the market globally will say that.

“As we speak, a pound is about N1,480 or more, and a dollar is about N1,200 or more. So what is the magic to use and say subsidy on PMS is gone? The government is subsidising PMS because if it gets to N1,000/litre the country could be set on fire.

“So the government is apprehensive. Just like I keep saying, the things they ought to have done before the removal of subsidy on petrol were not done. They are now beginning to sit with organisations and try to know what they ought to have done.

“So no reasonable government personnel who knows the politics or dynamics of the downstream oil sector would come out and say subsidy has been removed. There is a subsidy, the government is subsidising the product which is why you can see fuel at N650/litre,” he stated.

Asked whether he shared the view of the World Bank that the pump price of petrol should be N750/litre, Kekeocha replied, “Even at N750/litre it is still subsidised. What is the cost of fuel in London? It is about N1000 to N1,200/litre. So that is the range we should be looking at.”

Earlier, the National Public Relations Officer, IPMAN, Chief Ukadike Chinedu, told one of our correspondents that the subsidy on every litre of petrol should be about N400 currently.

“Remember I once told you that we are operating quasi-subsidy, but now that quasi-subsidy scenario is gone. It is now a full subsidy on PMS because the naira is down, so there is nothing you can say about it.

“Since the dollar is now about N1,100, if you buy it at that price for the purpose of importing petrol, that means PMS should be selling around N950 or N1,000/litre. This is because when the dollar was N750, petrol was sold at N595/litre. So there is no magic about this.

“Also, the cost of diesel is skyrocketing. Now, when diesel is sold at over N1,000/litre, the difference between its cost and that of PMS is not more than N5 or N10/litre in normal circumstances,” he stated.

The Convener, Nigerian Unity and Progressive Forum, Ifeanyi Egwuagu, called on Civil Society Organisations to embark on a nationwide peaceful demonstration to demand concrete action from the government towards ameliorating the sufferings of Nigerians.

In a statement issued in Abuja, Egwagu expressed worry over the economic hardship being faced by the majority of Nigerians over the years and accused the Tinubu administration of taking the sufferings of Nigerians to a higher degree through the removal of the subsidy.

“The plan to remove fuel subsidy has been on the front burner over the years. There is a logical argument that the positive impact of removing the subsidy will be felt in the long run.

“However, a government that truly has the socio-economic well-being of the people at heart will put in place sustainable measures to lessen the sufferings associated with the immediate subsidy removal.

“I cannot see any clear-cut vision by the present administration to enhance the socio-economic well-being of Nigerians. For me, what President Tinubu did was to put the cart before the horse.

“If a powerful cabal was alleged to have been stealing subsidy money, why not go after the cabal and recover the stolen wealth of the people from them? In any case, I do not see this government fighting corruption as desired by good-thinking Nigerians.”

 

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