Fuel Price Increment: Nigerians agree on deregulation on Nairametrics X Space

In a heated X-Space conversation hosted by Nairametrics on Thursday, October 10, 2024, experts and citizens debated the impact of the latest petrol price. The discussion, titled “NNPC Hikes Petrol Prices Again!! Where Do Nigerians Stand Now?” delved into the socio-economic implications of the Tinubu government’s recent decision to raise petrol prices from N897 to N1,030 per litre, a move that has sparked concerns across the country.

The price hike, which represents a 14.8% increase in just one month, has placed additional financial strain on Nigerians, exacerbating the ongoing economic hardship caused by the removal of the fuel subsidy in 2023.

The X Space, monitored by this medium, featured contributions from economists, business owners, and ordinary citizens, all highlighting the toll that rising petrol prices are taking on the country.

One of the discussants, Dr. Udoh, painted a bleak picture of the current economic climate. He explained that the rise in petrol prices has not only affected transportation but has also pushed the middle class into poverty.

According to him, the cost of fuel now fluctuates between N1,000 and N1,500 per litre at some independent stations, far exceeding the official NNPCL price of N1,030. “Governors can no longer afford luxury travel, and transportation costs are driving up the prices of food and essential goods,” he said.
The fallout from the price hike has rippled through every sector of the economy, with many Nigerians struggling to keep up with the rising cost of living. Udoh further emphasized the need for government intervention, stating, “Nigerians are a conquered people. Without action from the government, we will continue to see a decline in living standards.”

A participant by name Cyrus, raised concerns over the ambiguity surrounding the pricing dynamics between Dangote Group and NNPC. He noted that although marketers are keen to work with Dangote, exchange rates and crude oil prices continue to keep petrol undervalued. He questioned whether the government is being fully transparent about the true state of fuel deregulation, suggesting that hidden subsidies might still exist despite claims of full deregulation.

Recall that on Wednesday, the NNPCL stations across Abuja raised the retail price of Premium Motor Spirit (PMS) from N897 to N1,030 per litre—a 14.8% jump, translating to an N133 increase in just one month.

The hike comes amid worsening economic pressures in the country, exacerbated by the removal of the fuel subsidy by President Bola Ahmed Tinubu in 2023. The move has seen fuel prices fluctuate wildly, rising from N195 to N540 per litre in June and N617 by July of that year. The recent price hike by NNPCL further compounds the challenges faced by Nigerians.
The impact on businesses, particularly Micro, Small, and Medium Enterprises (MSMEs), was another key point of discussion on the X Spaces.

Zero Equilibrium, a business analyst, explained that while large corporations might be able to absorb the shock of the price hike, MSMEs are far more vulnerable. “The labor market is often the most expendable factor in businesses’ operations. As MSMEs struggle to cover their increased fuel costs, job losses are likely to skyrocket,” he warned.

The rising fuel costs also mean that transportation services, which many MSMEs rely on, will become prohibitively expensive, further shrinking profit margins and putting jobs at risk. Many participants agreed that without a clear government plan to protect businesses, the Nigerian economy could see a sharp increase in unemployment and poverty.

The conversation also centered on the need for greater transparency from the NNPC and the government. Ambassador Isreal stressed that all stakeholders, including the Dangote Group and the NNPC, must come together to negotiate terms that protect Nigerians’ livelihoods. “We need open negotiations that include all stakeholders—NNPC, Dangote, marketers, and the government—because Nigerians are the ones bearing the brunt of these policies,” he said.

Ayodele also called for the government to improve infrastructure, particularly for Compressed Natural Gas (CNG), which has been proposed as a cleaner and cheaper alternative to petrol. He noted that while CNG could potentially reduce fuel costs and boost Nigeria’s GDP, the infrastructure for its adoption is severely lacking. Without significant investment in this sector, the current reliance on petrol will only deepen poverty and unemployment.

The conversation returned repeatedly to the issue of subsidy removal, with Dr. Udoh advocating for a more balanced approach. “While I understand the need for deregulation, I believe full subsidy removal is not practical in a country like Nigeria. The government must step in to cushion the effects of price shocks,” he said.

Several participants, including Daniel, called for policy makers to clarify what deregulation truly means for Nigerians and to outline what the country stands to gain from enduring these economic hardships.

One solution proposed by Ayodele was to change the method of subsidy payments, advocating for direct cash transfers to citizens instead of fueling broad price cuts that often benefit businesses more than individuals.