LAGOS —The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA, Lagos Chamber of Commerce and Industry, LCCI, and Nigerian Employers Consultative Association, NECA, among others, yesterday expressed concern over the impact of the latest petrol price increase on jobs and the economy.
This came as private depot owners in Lagos and environs, yesterday, increased the depot price of petrol by 35.2 per cent to N960 per litre, from N710 per litre, about 12.3 per cent above the N855/ltr retail price allegedly stipulated by the petroleum industry authorities.
At the new depot price, independent petroleum marketers who are the main users of the private deports, are compelled to fix their pump price above N1,000/ltr.
However, the major oil marketers and NNPC Ltd sold at N895/ltr as they lifted the product from NNPC deports at a far cheaper rate, though they had effected a 54.3 per cent increase from N580/ltr.
A visit to the depots, including Satellite, which was earlier shut over pricing uncertainty that followed an increase in pump price, indicated that depot owners such as Coolspring, Integrated, Sharami, Ibeto, Ibchem and Aipec, sold the product at N960 per litre.
Checks by Vanguard indicated that supply remains inadequate and unstable as many outlets without the product were shut, while long queues were still seen at many filling stations with the product.
Black market operators also took advantage of the situation to hawk petrol in jerry cans at the cost of between N1,200 and N1,500/ltr in different parts of Lagos and Abuja.
Transporters that managed to buy the product passed the high cost to commuters, who were compelled to pay higher fares.
Price hike fails to improve supply
However, checks around Abuja Lagos and surrounding districts showed that most petrol stations were still without the product. For the few stations that opened, long queues were visible.
At NNPC station in Nyanya, a suburb of the nation’s capital, queues stretched for kilometres, despite the hike in pump price at the station from N617/litre to N897/litre.
Two waiting motorists who spoke to Vanguard noted that despite the price increase, buying at NNPC stations remained the cheapest but also the toughest.
A motorist, Mr Audu Yahaya, said: “The price here (NNPC station) is cheaper. If you go to Conoil, they are selling but it’s at N940 per litre. The difference is much. The queue there is still long. It is better for me here. I buy cheaper and by God’s grace, the metre should also be better.
“This government no longer listens to us. They do anything they like and that is why many people didn’t bother to come out to protest the other day because it is a waste of time. Just see what they have done! Amid this suffering and pain. It’s unbearable but what can we do? We will continue to adjust.’’
Also speaking, Jamiu Oseni, who said he had spent about an hour in the queue, lamented that staying in the queue had become part of his routine.
“I use the car as a taxi and I cannot afford to buy more expensive petrol. Hopefully, in the next hour, I will be able to buy it. The passengers will have to bear the cost because I have to recover the cost of the petrol and also add my own”, he said.
Before the price increase, NNPC Limited had blamed the two-month-old petrol shortage on distribution challenges. The national oil company later admitted that it was indebted to its suppliers to the tune of $6.8 billion which has curtailed its ability to import the product.
Speaking to Vanguard, the Public Relations Officer, the Independent Petroleum Marketers Association, IPMAN, Chief Chinedu Ukadike, said the situation has not changed as marketers were still waiting for the product.
He pointed out that an increase in ex-depot price also meant more capital is now required to be able to load a truck.
“We have been trading on margins in the past; this has made it even more difficult. Marketers will now have to combine their capital to be able to load a truck,” he added.
NACCIMA, OPS warn against impact
Reacting to the latest price hike, the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA, and the Organized Private Sector, OPS, expressed concerns over it, decrying its potential impact on businesses and consumers across the country.
In a statement, the National President of NACCIMA, Dele Kelvin Oye Esq., called on the Federal Government to engage in constructive dialogue with relevant stakeholders, including the organized private sector and labour unions to address the concerns raised about the price increase and its potential effects on the economy.
The statement reads: “The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA, expresses its concerns over the recent increase in the pump price of petrol to over N800 per litre at NNPC filling stations across the country.
“While we understand the complex factors that can influence fuel prices, such as global oil market dynamics and exchange rate fluctuations, we are troubled by the lack of prior notice and clear explanations provided by the government and the Nigerian National Petroleum Company Limited, NNPC, regarding this development.
“The timing of this price hike is particularly concerning as it has the potential to further exacerbate the impact on businesses and consumers, especially the vulnerable segments of the population and those on fixed incomes, who are still adjusting to the recent increase in the national minimum wage.”
According to Oye, “NACCIMA calls on government and NNPC to engage in constructive dialogue with relevant stakeholders, including the organized private sector and labour unions, to address concerns raised about this price increase and its potential effects on the economy.
“We are particularly interested in understanding the reported conditions that may have been agreed upon during the minimum wage negotiations, and how the current development aligns with those understandings. Maintaining trust and credibility in the government’s economic policies is crucial for fostering a conducive business environment and promoting inclusive growth.
“Furthermore, we urge the authorities to provide clarity on the NNPC’s financial reporting, which has seen conflicting statements about the company’s profitability and financial obligations.
Transparency and accountability within the state-owned oil company are essential for building public confidence.”
He added: “NACCIMA remains committed to working collaboratively with government and other stakeholders to find sustainable solutions that balance the needs of businesses, consumers, and the broader Nigerian economy. We believe that open dialogue and a shared commitment to the nation’s prosperity are key to navigating these complex challenges.”
Job losses, others loom – LCCI, ASBON
The recent hike in the price of premium motor spirit (PMS), otherwise known as petrol, will result in the death of many businesses, especially micro, small and medium enterprises (MSMEs), rise in inflation, and consequent job losses.
The Association of Small Business Owners of Nigeria, ASBON, and Lagos Chamber of Commerce and Industry, LCCI, stated this in different conversations with Vanguard.
LCCI conceded that the petrol subsidy is unsustainable; it however noted that removing it and subjecting Nigerians to a significant fuel price hike presents significant challenges, while ASBON said the government should have effected significant improvement on critical sectors and infrastructure before any hike in the price of petrol.
Director General of LCCI, Dr Chinyere Almona, said: “The impact on businesses will be severe, with fuel prices affecting supply and logistics, power generation, transportation, and factory operations. The cost of doing business will skyrocket, prices of goods will rise, and some firms may shut down due to low demand in the face of weakening consumer purchasing power. Of course, this will be followed by job losses.
“LCCI advocates for a more sustainable approach. Supporting the development of additional local refineries to process our crude for local consumption and potential export across Africa is the way forward. This long-term strategy is crucial for the stability and growth of our economy.”
ActionAid worries over pump price hike
On his part, the Country Director, of ActionAid Nigeria, Andrew Mamedu, condemned the sudden hike in pump price of PMS, saying it has plunged Nigerians into deeper economic woes and excruciating pains.
He said: “In May 2023, just before President Tinubu’s inauguration, petrol prices were already high at N185 per litre, causing widespread discontent among Nigerians due to the accompanying high cost of goods.
“However, on his first day in office, fuel prices skyrocketed to N500 per litre, leading to a sharp surge in the prices of essential commodities.
“Since then, fuel prices have continued to rise steadily. By August 2023, it reached N626.70 and continued to rise, surmounting N668.3 in January 2024 and N770.54 in July 2024. As of September 2024, it has increased again to a staggering N897 per litre, which greatly worsens the situation for many Nigerians.
“Nigeria’s fuel pricing is heavily influenced by the dollar-to-naira exchange rate due to the country’s reliance on imported fuel, which is denominated in US dollars.
“ActionAid Nigeria strongly condemns this development, which will push millions of Nigerians deeper into poverty. We demand transparency in fuel pricing, including a clear breakdown of costs and revenues associated with fuel imports, refining, and distribution.
“The Federal Government must provide a detailed explanation of the fuel pricing mechanism to ensure accountability and trust.
“Consequently, a depreciation of the naira against the dollar leads to higher fuel import costs, resulting in increased prices at the pump as well.This direct correlation between exchange rates and fuel prices makes Nigeria’s fuel pricing vulnerable to exchange rate fluctuations.
“Any changes in the dollar-to-naira rate will have a ripple effect on fuel import costs, ultimately impacting the prices consumers pay at the pump, and highlighting the need for a more stable exchange rate to mitigate the volatility in fuel pricing.
“It is one thing to fix an impending problem of inflation in the economy, and it is another thing to provide temporary solutions to keep the mouths of Nigerians shut.”
While acknowledging that minimum wage has increased from N30,000 to N70,000, the ActionAid boss said: “It fails to address the root causes of inflation and does little to alleviate the suffering of Nigerians, who continue to bear the brunt of skyrocketing commodity prices, particularly fuel costs. We need a comprehensive and sustainable solution, not just a quick fix to silence the masses.
“To address the root causes of this crisis, we also demand the establishment of an independent committee to monitor fuel pricing and ensure transparency.
“This committee must include representatives from civil society, the private sector, and government agencies.
“Additionally, the Federal Government must invest in Nigerian refineries and provide targeted support to vulnerable citizens and small businesses affected by fuel price increases.
“The Federal Government must prioritise the welfare of Nigerian citizens over revenue generation and provide a comprehensive plan to protect vulnerable citizens and support small businesses within 48 hours.
“This plan must include measures to mitigate the impact of high fuel prices on the poor and vulnerable.
Concurrently, the Federal Government must implement a comprehensive economic reform plan as soon as possible, including measures to diversify the economy, increase foreign exchange earnings, and stabilize the naira.
“This plan should include specific targets and timelines for reducing inflation, improving foreign investment, and promoting local production. We demand transparency and regular progress updates to ensure accountability and build trust with the citizens.
“ActionAid Nigeria will hold the government accountable for their actions and demand a better future for all Nigerians.”
In his remark, ASBON President, Dr. Femi Egbesola, stated: “Critical sectors and infrastructure are yet to be fixed, sectors like agriculture, food and its value chain, health, business environment, insecurity and infrastructures like electricity, roads, etc. One would have expected a significant improvement in these before any hike in the price of petrol.
For MSMEs, this increase is another big blow. Quite a number in millions of small businesses are dead already. Many more are ailing and struggling to survive. This development will cause more deaths of MSMEs and reduce the profitability of existing ones.
It’s impossible to pass the buck of price increases to consumers whose disposable income is already depleted to break point.
Hike to worsen poverty — NECA
On its part, the Nigeria Employers Consultative Association, NECA, faulted the new price, saying it will inflict more pain on Nigerians and contribute to the increase in the cost of doing business.
Reacting, the Director-General of NECA, Wale-Smatt Oyerinde, pleaded with the government to rethink and do all that is necessary to address the continuous impoverishment of Nigerians and incapacitation of organized businesses.
He said “The new pump price of petrol is not only worrisome but also unfair. We had expected that the Government would leverage the momentum created by the completion of the Dangote refinery and the planned commencement of operation of the Port-Harcourt refinery to clear the obvious self-inflicted pain on Nigerians and progressively reduce the pump price of petrol. This seems not to be the case.
“This new pump price could be seen as making Nigerians pay for the crass inefficiency in the NNPC. Rather than address the fundamentals that have made Nigeria a net importer of petrol, even when we have four refineries, the Government continues to inflict pain on Nigerians and inadvertently, contributing to the increase in the cost of doing business.
“We urge that Government should have a rethink and do all that is necessary to address the continuous impoverishment of Nigerians and incapacitation of organized businesses.”
On her part, the National Secretary of the Small Scale Women Farmers Organisation in Nigeria, SWOFON, Chinasa Asonye, said: “The new fuel price will affect everything and there will be an increase on everything.
“As a woman farmer, everything about our farming has started to go up. The feeds which we have already ordered have been increased and we do not know the reason for the increment until the news break.
“These are feeds that we have paid for but because we did not take them from the company, they increased the price and told us that we are going to pay more before carrying our feeds. So, it will not be easy for the masses at all.”
Also, President of the Association of Professional Women Engineers of Nigeria, Lagos Chapter, Engr. Atinuke Owolabi, said: “I think they derive joy in seeing people suffer. Even at the former price, a lot of people could not buy petrol.”
Goods, services’ll cost more — CTA
In an interview with Vanguard, yesterday, the Executive Director, Centre for Transparency Initiative, CTA, Engr. Faith Nwadishi said the hike in fuel prices will lead to price increases across the sectors.
She, however, frowned on the situation where the price of petrol will be determined by the Federal Executive Council, saying it is not the council’s responsibility.
She said: “FEC does not have any business at all in fuel pricing because the PIA already took care of that. Remember that before the inception of PIA, we had the PPPRA (Petroleum Products Pricing Regulatory Agency) that was saddled with the responsibility of pricing. Now, that responsibility has been taken to the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA. They are the ones with the prerogative and right to do that.
“Moreover, in the PIA, it says pump pricing will be done in a free market without government intervention. So, we have a Petroleum Industry Act that has outlined how you go about that”.
She pointed out that the government has been inconsistent in its policy, especially in asking traders and producers to bring down prices while on the other hand increasing the prices that impact businesses and production.
“Nigerians are very resilient and it will also come into play in this policy because we never say no, we never give up. And so we are not going to give up because this is happening”, she added.
Nigeria should expect high inflation
Similarly, Professor Emeritus in Petroleum Economics & Policy Executive Director, Emmanuel Egbogah Foundation, Wumi Iledare, said: “There are two inflation categories—demand-pull and cost-push.
Nigeria suffers from both types. Increasing wages and prices of raw materials do lead to higher inflation. So increasing the price at the pump will in the short run lead to a rising price level in the economy.
“Unfortunately it is a dilemma to charge a price below the clearing market price because of the fear of inflation, and this anxiety is legitimate. But not doing the needful now is postponing the evil days.
Selling fuel at N897 per litre is still below the market clearing price of petrol. Just look at the price of diesel. The gap is still neither incomprehensible nor justifiable. The positive side at the moment is the current price setting by the dormant retail firm is helpful to Dangote optically within the context of the entitled Nigerians for freebies.
“Interestingly, however, pricing below the market clearing price will lead to shortages and black market structure. I don’t expect to price its wholesale price too far below 1000, which is, perhaps, a little below the current landing cost, in my opinion.
“The consequences of pricing below the market clearing price are as negatively impactful as inflation in any economy. So, I would not worry much about the inflationary effect of the petrol price trend towards market clearing price until that price is attained for fiscal stability.
“There must be the balancing of three dimensions of the misery index – inflation, unemployment, and negative growth. Nigeria needs effective manpower deployment much more than manpower development to stabilise the economy.”
VANGUARD
