November 26, 2020

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AfricaTopForum – News Around Africa

The battle next time

6 min read

Kayode Robert Idowu

 

After some respite apparently occasioned by restive temper in the citizenry, we are back in Nigeria on the stretch racks of periodic hikes in the cost of petrol that government believes citizens will sooner than later come to terms with. But there are indications the idea isn’t flying that easily. All is thankfully calm for now, but another blowout may well be brewing. Recent experience teaches that the trigger could come so gratuitously and improbably that it might not even seem connected with the issue of fuel price and concomitant economic hardships. Seething exasperation over hardships disposes citizens to any stray trigger, just the way it takes only a slight pinch to unleash hot air from an inflated balloon.

Government, penultimate week, announced a new price regime by which the ex-depot price of petrol was raised to N155.17 – thereby nudging marketers to sell at between N165 and N173 per litre to consumers. The move followed from the policy since March 2020 to deregulate the downstream sector and eliminate subsidies, for which reason the pumphead price of petrol has risen steadily from between N121.50 and N123.50 mid-this year to averagely N170 per litre at the moment. When the price crested about N162 per litre in September, along with quantum leaps in tariffs chargeable by electricity providers, organised labour rallied to rebuff the increases. But labour leaders soon sheathed their swords following a pact with government that many people considered largely self-serving. It was shortly after that the #EndSars protests were headed up by youths.

The catch: whereas those protests were originally targeted at redressing police brutality, they soon blossomed into a blowback against economic hardships and poor governance issues. That was why protesters said they weren’t appeased by the disbandment of the controversial squad, until their cause was hijacked by hoodlums. There is good reason to believe that a potential vent offered for citizens’ displeasure over economic hardships, which was aborted by organised   labour’s hasty truce, fuelled the intensity of the #EndSars protests. Meanwhile, the #EndSars protests spiralled off-handle for government because the promoters proceeded by design without defined leadership, unlike organised labour that has leaders who could be called in for dialogue. Even now, proxy warfare rages. There are seeming residues of anger in the citizenry, like the commercial motorbikers’ revolt in Lagos last week, which are tagged #EndSars protests; though, if you probe, you would likely find that the motorcyclists acted more out of exasperation over economic hardships than over police brutality.

Although government designed the fuel price adjustments to be monthly, there has been a freeze since September when labour threatened its battle that never was before the #EndSars protests kicked in. Now the movement, which many have written off as toothless, is back – growling against the latest hike in petrol price. Nigeria Labour Congress (NLC) President Ayuba Wabba, last week, issued a statement demanding immediate reversal of the new price, saying the fresh increase back-stabbed labour and has made the living conditions of Nigerians worse. He proposed alternatives to government’s template of deregulation while local refineries are being fixed. Among his options is that government should strike deals with foreign refineries close to Nigeria on supplying crude at negotiated costs outside prevailing international market rates, just so to significantly bring down the landing costs of refined products in the country. Wabba added that government should demonstrate the will to stamp out petroleum products smuggling, saying: “We need to see big-time petroleum smugglers arraigned in the court of law and made to pay for their crimes.”

Similarly, the Trade Union Congress of Nigeria (TUC) described the latest price increase as being in violation of the understanding reached with government. In a statement jointly signed by its President, Mr. Quadri Olaleye, and Secretary-General, Mr. Musa-Lawal Ozigi, the union recalled that it conceded government’s explanation that subsidy removal was the only way out to avert economic collapse and massive job losses. But now it argues: “If the government claims to have deregulated the downstream sector of the oil and gas by removing fuel subsidy, it means independent oil marketers are importing petrol at their own costs. Information at our disposal, however, is that no independent marketer is importing fuel because they cannot access dollars. The Nigerian National Petroleum Corporations (NNPC) is still holding on to that monopoly.” Neither labour centre specified fresh measures they could take in fighting the latest increase, but they sufficiently signalled that they were consulting.

Many Nigerians would say it serves those unionists right that they got eggs splashed in their faces, because they yielded ground too readily the last time on the basis of a pact with government that seemed more like cashing out for themselves than getting relief for citizens who pinned hopes on them. Organised labour is in a rare club of those that can persuade government, but at the end of the negotiations upon which it pulled back, nothing changed: the price of fuel remained, without indication that government’s design of deregulation as abdication was addressed; even the brief suspension of electricity tariff increase that was eked out has elapsed and the contested rates slammed back on.

Whatever may be the failings of that encounter, however, there is sense, in my view, in the arguments now being plied by labour. Some of us have always contended that the problem isn’t deregulation of the downstream sector, which is inevitable, but that deregulation is not synonymous with abdication whereby government simply hands Nigerians over to wild international market forces without local modulation. It is local modulation Wabba canvassed with the option of negotiated rates for crude oil supply to nearby foreign refineries, and the need to tackle cross-border smuggling of products beyond merely jerking up prices to peer with the rates in non-oil producing neighbouring countries. Also, going by TUC’s argument, it is scandalous that government as sole importer of refined products through NNPC is trading with Nigerians for profit.

But then government, perhaps unwittingly, seems to flaunt its abdication. Petroleum Resources Minister of State Timipre Sylva, last week, hinged the latest increase in domestic cost of petrol on recent announcement by an American pharmaceutical company, Pfizer, of its breakthrough in Covid-19 vaccine. “What happened recently was because of the announcement of a vaccine for Covid-19 by Pfizer. With that, crude oil prices went up a little bit…When crude oil prices go up a little bit, then you will see that (it will) instantly reflect on the price of petrol, which is a derivative of crude oil,” he told State House correspondents after a parley with President Muhammadu Buhari in Abuja. To boot, the minister was optimistic that Nigerians will get use to deregulation of petrol price just as they did with diesel and kerosene. He argued: “Look at a situation where diesel has been deregulated long ago, where kerosene has been deregulated long ago, and these are the fuels the poorest people in Nigeria interact with more…If you want to transport food from the north to the south, it will be by trucks that are run by diesel, not with petrol, (while) kerosene is the preferred fuel at the lowest level of our society. These have been deregulated long ago. So, what is the problem with deregulating petrol, which is mostly used by the elite?”

Truth, however, is: the minister’s postulations are just so wrongheaded. Contrary to his claim, diesel is used by heavy duty operators like manufacturers, who pass the burden on to end-consumers of their products; that is what has fuelled inflation in the economy. Even the food supply trucks Sylva mentioned aren’t operated by the poor employee-drivers. As for kerosene, the poor have long abandoned its use and resorted to massive deforestation for wood fuel where they genuinely can’t afford gas. Petrol is far less evitable and has more extensive inflationary effects. It is the staple of average motorists, including urban commuter buses and motorcyclists whose only option is to hike their fares on commuters, who in turn hike the costs of their items of trade on consumers who can’t afford them; or others who look to employers for salary raises that are not forthcoming. That is why there must be local modulation of petrol pricing to avert another blowout over hardships.

 

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