………by Jenifer Dike…….
In the last couple of weeks, the price of crude oil has been surging high. The price last week rallied to $65per barrel, the highest in thirteen months. This was after oil price sank to sub-zero level in the wake of the Covid-19 pandemic in 2020.
Ordinarily, for a country like Nigeria that is heavily dependent on revenues from oil, the price rally should be good news as it portends more money for the government to provide social amenities for the welfare of the citizens. But the cheery news of oil price rally is dampened by the prospect of a rise in the pump price of Premium Motor Spirit (petrol).
During the launch of the Nigerian Upstream Cost Optimization Programme (NUCOP) some weeks back both the Minister of State for Petroleum Resources, Chief Timipre Sylva, and the Group Managing Director of NNPC, Mallam Mele Kyari, hinted at the prospect of a rise in the pump price of petrol in the country in line with the deregulation regime in operation in the downstream, following the rise in the price of crude oil.
On the other hands the leadership of organized labour have been beating drums of war, contending that a pump price increase would impose more hardship on Nigerians who are already battling the effect of a sluggish economy.
But experts have kicked against organised labour resistance to the inevitable increase in the pump price of petrol. They said that there is no where in West Africa where the price of Petrol is less than 200 Naira per litre. For instance It is almost 350 Naira per litre in Ghana at current exchange.
Prof. Wumi IIledare, a Professor of petroleum economics told our correspondent that the labor unions are living in the memory of the past and compromising a sustainable future in the process.
According to industry stakeholders the organised labour’s hardline posture of giving conditions to support any increase in the pump price of petrol is not acceptable. It is said that labour Unions are insisting the government should fix the Refineries and make available forex to marketers at affordable rates.
But experts are saying that labour Union should be more concern provisions of infrastructural facilities that will benefit majority of Nigerians.
Mr. Edward Dimeji, an Executive Director of Hyde Petroleum limited, an independent petroleum marketer explained to Financial Energy Review that labour Unions have consistently over the decades keeps asking for the wrong things . “How has low fuel price ever helped the overall well being of the average Nigerian
“Labor should have asked for better schools, hospitals among others. If there are better schools the chances of lifting people out of poverty would have been much higher. Instead they encouraged government to squander trillions of naira in so called subsidies and we are still in the same spot 22 years later” he said..
Prof. Iledare wondered why labour should be asking the government to subisidize forex and petrol at the same time is asking the government to commit suicide. “It is better to let the unions go on strike than do those two things. Why are the unions not complaining about DSTV and telecom. I hate to say we told them in 2016 not to set the pump price at 140 Naira. They did not listen” he said.
Over the years deregulation of the downstream and pump price increase have been very testy issues that have generated a lot of conflict between the government and labour for close to two decades. Since 2004 when the Federal Government started the policy of selling the crude oil earmarked for local refining/consumption at international price, it created a situation where the landing price of petroleum products was higher than the regulated pump price of petroleum products in the country.
The old system where crude oil earmarked for local refining/consumption was sold to the NNPC at a subsidized rate was able to take care of price differential between landing cost and regulated pump price. With the new policy, a system of subsidy payment was introduced to take care of the price differential. But over time, the subsidy system became cumbersome and the Federal Government began to find it unwieldy and unsustainable.
The various attempts to end the subsidy regime by deregulating the downstream became a constant subject of bitter conflicts between the government and labour sometimes resulting in debilitating strikes.