Experts have expounded economic developments that would reduce Nigeria’s cost of living crisis in 2025. They believe that everything points to considerable improvement in the standard of living in 2025.
Their projections are premised on the fact that Nigeria has not only attained self-sufficiency in refined petroleum products but has finally joined the revered club of nations exporting the essential commodities. The benefit from that feat is multi-faceted.
First, Nigeria will now conserve the $20 billion spent annually on refined petroleum products imports. That alone will ease the excruciating demand pressure on the nation’s lean foreign reserves and curtail the naira’s disorderly retreat in the foreign exchange market.
The next factor is that Nigeria is expected to rake in a minimum of $15 billion annually from refined petroleum products exports. That on its own will ease the catastrophic supply deficit that crippled the market and pushed the exchange rate of the naira to unacceptable limits.
The consequence of the expected drastic reduction in forex demand and considerable increase in supply is that the naira will appreciate considerably and consequently exert downward pressure on spiraling inflation.
As stated earlier, there are multiple gains from Nigeria’s attainment of self-sufficiency in refined petroleum products processing. The most important gain has already started tumbling in. The pump price of petrol has dropped by well over N200 per litre in the last two weeks.
That is because besides the giant refinery built by Aliko Dangote, the old Port Harcourt Refinery has finally come on stream. Two week ago, the Warri Refinery with capacity for 125,000 barrels of crude oil per day joined the fray and consolidated Nigeria’s self-sufficiency in refined petroleum production.
Besides the competition now being intensified in the downstream sector of the oil industry, the federal government’s decision to sell crude oil to domestic refiners in naira has set the pace for extensive downward review of petrol price.
In fact, the situation is so tense in the industry that the Independent Petroleum Marketers Association of Nigeria (IPMAN), the cartel of independent petroleum products retailers, assured consumers last week that they foresee a situation where the pump price of petrol will drop below N500 per litre in 2025.
Capping the gains in the downstream sector of the oil industry is outstanding inroads in the upstream sector of the industry.
When the 2025 Appropriation Bill was on the drawing board, Nigeria was managing to produce a miserable 1.3 million barrels of crude oil daily even as the Organisation of Petroleum Exporting Countries (OPEC) mandates it to produce 1.8 million barrels per day.
There is significant improvement in oil production following the marching order handed the military by President Bola Ahmed Tinubu over the stealing of 450,000 barrels of crude oil daily by high velocity criminals.
The military has not won the war against oil theft yet but the thieves have been sufficiently intimidated to ease their stranglehold on Nigeria’s one-handed economy.
Oil production has inched up to 1.7 million barrels per day.
The gain from the war against oil theft could easily be seen in the nation’s foreign reserves. It leisurely crossed the $40 billion mark for the first time in decades.
With all that is happening, pundits contend that Nigeria will be able to curtail the calamitous foreign exchange supply deficit, and at the same time reduce demand sufficiently to allow the naira to appreciate and stem imported inflation.
The reduction in the pump price of petrol is expected to exert downward pressure on domestic causes of inflation and give consumers a new lease of life.
However, there are fears that the rosy projections by pundits for 2025 could only be realised if the federal government is willing to wield the big stick against exploitative retailers, greedy market unionists and some saboteurs in the National Union of Road Transport Workers (NURTW).
The three groups of people account for 70 per cent of the prices and fare hikes spiraling inflation out of control.
A 50kg bag of unripe plantain sells for N15,000 at the Ketu Market on the outskirts of Lagos. Consumers buying the commodity are compelled to pay a levy of N5,000 to the market union. The union levies anyone buying bulk items in the market. Their levy translates to N300 for every N1,000 a consumer spends in the market. That in turn hikes the cost of food items by 30 per cent. The union does nothing that justifies the levy.
The price of petrol has dropped in the last two weeks by more than N200 per litre. However, NURTW adamantly maintains the fare hike it imposed when petrol price went up in October, 2024.
During the end of year festivities, the union hiked the bus fare from Lagos to the east from N35,000 to N65,000. The union is the one that determines transport fares because it collects the fare of one person in any bus leaving the park.
If 200 buses leave different parks in Lagos for the east in a given day, the union collects N65,000 multiplied by 200. That sums up to N13 million. Besides, NURTW collects N200 at every bus stop in Lagos from commuter drivers. One source put the annual income of the NURTW conservatively at N15 billion.
NURTW is absolutely irrelevant to Nigeria’s economy. Ironically, it has spiraled inflation to the extent of the levy it imposes on commuters.
What is needed to allow the expected gains of Nigeria’s self-sufficiency in refined petroleum products to taper down to persevering Nigerian consumers is a functional price control structure.
The federal government should empower the Federal Competition and Consumer Protection Commission (FCCPC) to go after retailers and force them off the pricing mechanism and allow market forces of demand and supply to fix prices.
The market unions should be banned and the ban enforced rigorously. Commuter drivers should be freed from the merciless grip of the NURTW. The wings of the three groups should be clipped if the war against inflation must be won.