Life has not been the same for small business owners since the removal of fuel subsidy by President Bola Ahmed Tinubuas they struggle to adjust to the new reality; BENJAMIN UMUTEME writes.
The removal of fuel subsidy by President Bola Ahmed Tinubu-led administration has continued to shake the fabric of the country. Across various sectors, most people are feeling the pinch, especially with the increase in the prices of goods and services.
President Tinubu, in his inaugural speech, had said that there would be no more subsidy as the administration of former President Muhammadu Buhari, did not make provision for the continuation of the scheme.
“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.
“The fuel subsidy is gone. 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,” he stated.
There was a flurry of activities immediately after the President’s pronouncement as many marketers quickly shut their filling stations, and thereafter went on to hike the pump price of the products from the official N197 per litre to over N500.
However, the pump price of the petrol seems to have finally settled at between N530 and N557, while pockets of filling stations across the country still sell for as high as N600 per litre.
Adjusting to realities
As expected the prices of goods and services immediately aligned with the increase in the pump price of PMS, just as businesses were forced to quickly adjust to the prevailing realities.
Ninety per cent of transportation of goods and services in Nigeria is undertaken by road.
This got analysts predicting further rise in the Consumer Price Index (CPI) mostly referred to as inflation.
The National Bureau of Statistics (NBS), on Thursday, in a report published on its website stated that Nigeria’s headline inflation rate increased to 22.41 per cent in May 2023, relative to April 2023 headline inflation rate which was 22.22 per cent.
According to the NBS, the figure represents a 0.19 percentage points increase when compared to the preceding month. April 2023 headline inflation rate.
Similarly, on a year-on-year basis, the headline inflation rate was 4.70 per cent higher compared to the rate recorded in May 2022, which was (17.71%).
A closer look at the CPI report indicated once again that food inflation continues to push up inflation.
According to the report, the food inflation rate in May 2023 stood at 24.82 per cent on a year-on-year basis; which was 5.33 percentage points higher compared to the rate recorded in May 2022 (19.50%).
The rise in the food inflation on a year-on-year basis was caused by increases in prices of oil and fat, yam and other tubers, bread and cereals, fish, potatoes, fruits, meat, vegetable, spirit.
On a month-on-month basis, the food inflation rate in May 2023 was 2.19 per cent, this was 0.06 per cent higher compared to the rate recorded in April 2023 (2.13%).
The average annual rate of food inflation for the 12 months ending May 2023 over the previous twelvemonth average was 23.65%, which was 4.97 % points increase from the average annual rate of change recorded in May 2022 (18.68%).
Oil marketers groan
Even the ‘almighty’ oil marketers are also feeling the heat of the removal of the fuel subsidy. They say, the sudden adjustment of depot price has put them in a fix. According to the marketers, they are being forced to pay a N13 million differential by the Nigeria National Petroleum Company Limited (NNPCL).
The NNPCL had to quickly adjust its pump price across its retail outlets citing market realities for its decision.
Speaking at a world press conference on Wednesday, National President Natural Oil and Gas Suppliers Association of Nigeria (NOGASA), Bennet Korie, said with the fuel subsidy removal, the body was feeling the heat as it now has to pay more to get the same product.
Korie said his members now spend as much as N25 million to purchase a 45,000 litres truck of Premium Motor Spirit popularly referred to as petrol.
Before the subsidy was withdrawn, a fuel tanker was purchased for N7 million.
According to NOGASA, the situation has made it impossible for its members to pay the differentials and get new supplies.
It is good to remove subsidy but there are things that people don’t know, for instance, some of the marketers don’t have the money to pay differentials.
The NNPCL had last week in a circular to all marketers urged them to pay the differentials before they can get new products.
Korie said: “This is because in less than an hour that Mr. President announced the removal of the subsidy, the price changed and that affected a lot of marketers. We are talking about millions of naira. Before the removal, a tanker of fuel was selling for about seven million, but in less than an hour, it went up to N25 million, where is the money.
“Subsidy was removed without considering some of these problems. At the same time, before now, we have this PEF. But they are not paying the marketers. There is no money, where do we get the money?
“Therefore, I want to use this opportunity to appeal to the government to please pay marketers their PEF, so that they will continue in business, if it is not paid, we would not get fuel to sell,” he added.
…Business owners too
The new patrol price has equally led to increase in prices of goods and services and the attendant increases associated with it.
For instance, small businesses have been adjusting their prices very fast too.
According to Chijioke Obinna, who manages a wholesale provision store in Jikwoyi, he had had to adjust the price of his goods upwards considering the sudden hike in fuel price.
“Nobody gave us notice before increasing the price of fuel. While it is a very painful decision for me to increase the prices of my goods, I have no choice except I don’t want to continue doing business.
“Normally, the truck that brings goods to me from Nyanya collects N10,000, but after the increase in petrol price, I had to pay N15,000 with ‘abeg’ before they agreed to come to Jikwoyi
Before now, I used to restock twice a week, but as it is now, I have decided to do it once a week to cut costs,” he said.
For Magdalene Mike, a small time trader, who deals in foodstuff, said she was getting used to the change in the prices of goods.
She told this reporter that she resorted to counting what she bought instead of her usual way of buying wholesale.
“Transport has increased and this has also led to an increase in the price of the things we buy. I now pay N400 to Karu from Jikwoyi instead of N200. And I have had to cut down on the number of times I go to the market to purchase goods,” Magdalene stated.
On her part, Blessing Chibuzor, a local drink seller, said she sadly adjusted the price of her drinks when she realized that she was paying more to get the product to churn out her drink.
She said, “As it is now, I have limited the number of places I take my drinks to. I realized that I was able to save N700 from my decision to reduce the places I take drinks everyday.”