The decision by President Bola Ahmed Tinubu to announce the sudden removal of fuel subsidy removal has come under attack with analysts and other segments of Nigerians describing it as hasty and insensitive.
Blueprint’s findings revealed the government’s decision has forced the price of the commodity to between 100 and 250 per cent increase, as the Premium Motor Spirit (PMS) now sells for between N500 and N700 per litre in some parts of the country.
In his inaugural speech Monday as Nigeria’s new leader, Tinubu said: “We commend the decision of the outgoing administration in phasing out the petrol subsidy regime which has increasingly favoured the rich more than the poor.
“Subsidy can no longer justify its ever-increasing costs in the wake of drying resources. We shall instead re-channel the funds into better investment in public infrastructure, education, health care and jobs that will materially improve the lives of millions.”
Blueprint’s investigations in Lagos showed the price of the commodity had risen to between 100 and 250 per cent, and this had immediately been passed to commuters who will have to pay through their nose.
For instance, between Egbeda and Ikeja Under Bridge that used to cost N300, the fare jumped to N1, 000, representing over 200 per cent hike.
Many Lagos residents most affected by the development have taken to social media to vent their frustration and disbelief after transport costs skyrocketed in a matter of hours.
It was also observed that many commuters in Lagos were stranded as there were few commercial buses on the roads.
The reason, it was gathered, is because a lot of vehicles were on queues at petrol stations across the state.
Also, Danfo (yellow) buses that are active on the road now charged up to N1, 500 per drop from Mowe to Berger and N300 per drop from Abule Oja to Oyigbo.
Some other buses charged N800 from Cele to Berger, while Yaba to Obalende now costs N700.
A motorist, Juwon Osunnuyi, who spoke on the development, said transporters are stuck at petrol stations, while those who spent the night searching for the product hiked their fares.
The same scenario is playing out across Anambra state as many fuel stations had equally shut down in some parts of the state, with the owners claiming the product was not available.
As at the time of this report, the NNPC Mega Station at Amawbia, Mobil Station in Okpuno, Festoil at Aroma Junction, all in Awka South local government area of state, were shut down either because of subsidy removal or the sit-at-home declared by a faction of Indigenous People of Biafra (IPOB) in remembrance of victims of the 1967 to 1970 Biafra War.
This was even as Javamin Fuel Station located close to Government House Awka, sold for N500 per litre with long queues, as against N700 at Ifenna oil and others operating within the Awka capital city.
A commercial driver, Mr Uche Ogudinobi, told Blueprint that the development forced a hike in fare from N50 to N150 and N200 per drop, depending on the distance.
When contacted, Commissioner for Petroleum Resources, Tony Ifeanya, described the ugly development as an act of wickedness on the sides of petrol marketers, and assured that the government would monitor it and come out with official position.
“We know it is a fallout from Mr President’s speech yesterday. Ordinarily, one does not think that this should bring about this kind reaction. Mr President’s statement did not show that it will be implemented immediately. Are they selling the product in high price because they bought new one?
“Is it not wickedness? Are they changing the pump price because they have finished selling the old products or bought new one? This is how we are killing ourselves and blame the government. Anambra state government cannot just fold its hands. We have deployed our monitoring teams to gather the reports before we can take action.”
Condemning the development, analysts faulted President Tinubu, saying the prompt removal would have far reaching multiplier effect and further aggravate the suffering of the people, already stretched to breaking limit.
Speaking Tuesday on Arise Television monitored by Blueprint, an academic, Professor Ndubisi Nwokoma, said the effect was already manifesting as marketers were either shutting down their operations or increased the price of the old stock astronomically.
He said the one-day old government would have embarked on a phased removal, while preparing soft landing to minimise the impact it would have on the Nigerian masses.
The University of Lagos don also said the government would have at least waited for the full take-off of the Dangote Refinery.
“The Nigerian masses are yet to recover from change in naira notes, which left an indelible level of poverty. The currency change brought about an increase in inflation that Nigerians are still battling with.
“So, the immediate removal of petrol subsidy will further stoke inflation. The hike in petrol price will lead to another rise in the prices of commodities, particularly food stuff, while the bottom line will be further rise in inflation, thereby aggravating the suffering of the masses,” Nwokoma further said.
Also in a reaction, an oil and gas analyst, Dan D. Kunle, said stockholders would want to maximize the opportunity that the president’s statement provides.
According to him, some stations will refuse to sell petrol while waiting for the price to skyrocket and demand to increase, before selling at up to N450 to N500 per liter.
Another analyst, Kayode Oluwadare, said the Buhari administration did not put measures in place to ease the burden the masses would encounter when fuel subsidy is finally removed.
He said: “The buck now rests on the Tinubu administration which has no choice but to remove the fuel subsidy. However, it was expected that palliatives will be put in place to reduce the burden on Nigerians, before the announcement.”
Hyde Energy, PETROAN
In a similar reaction, Chief Executive of Hyde Energy, Olademeji Edwards said: “Subsidy removal has been a 20-year-old conversation. Unfortunately, we missed several opportunities in which subsidies would have been removed and where the cushion on the increased price would have been easy on Nigerians. That has come and gone especially during the pandemic when the crude oil prices were low and we would have enjoyed a period of low petrol prices. It is inevitable.
“The challenges the country has are the absolute price of oil and the exchange rate. As long as you have high oil prices and a weak naira, the price of petrol pump price will be relatively high. But as investments are happening in the country and there is an increase in the Naira, we expect the value of the naira to go up and ultimately, that should ultimately affect the price.”
Also speaking, President of Petroleum Outlets Owners Association of Nigeria, PETROAN, Billy Gillis-Harry, agreed that the hasty removal of the subsidy would bring more hardship to Nigerians.
Gillis-Harry said “stakeholders expected the new administration to call for an all engaging meetings to exchange ideas and make positive projections on investment opportunities, share data on gaps before actions are taken.”
However, national president of the Independent Petroleum Marketers Association of Nigeria (IPMAN), on his part, Chinedu Okoronkwo said the government should exert energy on attracting investment in the Compressed Natural Gas (CNG) space to provide alternative to petrol in the event of subsidy withdrawal.
He said the IPMAN had written to the previous administration, seeking for access to the N250 billion intervention fund for the National Gas Expansion Programme.
IPMAN, in a letter dated April 3, 2023, requested that the government should urge the Central Bank of Nigeria (CBN) to release the N250 billion as loans to vehicle owners.
The oil marketers’ body said the N250 billion can be used by car, tricycle and truck owners to convert to gas due to the projected hike in PMS after the proposed subsidy removal.
Okoronkwo noted that the proposed removal of subsidy had been projected to raise the cost of petrol, significantly above the current pump price.
Okoronkwo, said aside from the N250 billion intervention fund request to help cushion the impact of removing the subsidy, the IPMAN, had entered into partnership with Gas Analytics & Solutions Ltd to locate natural gas dispensers at over 30,000 filling stations in Nigeria.
He said: “Our partners, Gas Analytics & Solutions Ltd, have an agreement with the Independent Petroleum Marketers Association of Nigeria to co-locate natural gas dispensers on our network of over 30,000 filling stations in Nigeria.
“This collaboration with IPMAN presents the most economical and expedient platform to deploy the necessary infrastructure to support a fast national roll-out of CNG (Compressed Natural Gas) for vehicles.
“What is left is the support of the Central Bank of Nigeria to provide access to the Gas Expansion Fund for vehicles, Keke, and truck owners to access loans to finance the acquisition of natural gas conversion kits.”
The conversion to gas will increase demands that will enable oil marketers to set up more CNG across filling stations.
“Without a large pool of CNG customers, IPMAN will not be able to raise the funds required to set up CNG filling stations. We believe that with the support of the Ministry of Finance, IPMAN’s partnership with Gas Analytics will provide a platform that can in a matter of a few months cushion the impact of petrol subsidy removal and significantly reduce the need for foreign exchange to import petrol,” he further explained.
He urged the Tinubu-led government to urgently address the requests to galvanize the industry.