Why fuel is costly in Nigeria, far from the reach of many Nigerians, is not the cost of refining. It is not importation of fuel that makes the local price of fuel outrageous. Having all our refineries working and refining our crude oil at home will not bring fuel price down to what Nigerians can afford.
Crude oil and its components are international commodities and are priced in dollars. This is the reason local fuel price will always be a subject of forex rate. We seem to have just two options now if we want to buy cheap fuel in Nigeria.
The first option is for FG to return subsidy on fuel. It is especially so now that the factors that engendered corruption in the subsidy administration, chief of which is every Tom, Dick and Harry importing fuel, have either been reduced or totally eradicated. It is on this note that one finds it desirable that NNPCL should be the sole off-taker of fuel from Dangote Refinery. If FG returns subsidy payment and NNPCL is the sole buyer of fuel from Dangote Refinery, it becomes easier for FG to track the amount of fuel bought by NNPCL and amount of fuel supplied by them and the amount of subsidy to be paid. This way, Nigerians, not shyllock importers and dealers of fuel, will be the beneficiaries of subsidy paid to ease economic burdens on them.
The second option is for naira to gain appreciably, more than 1k, over dollar. The lower the exchange rate in favour of naira, the lower the fuel price. Ceteris paribus! Apart from increased productivity which will reduce reliance on foreign goods, stimulate exportation and bring in foreign currencies, dollar especially, reducing or eliminating pressure on dollar that makes it outrageous against naira is one sure way to strengthen naira. This is what FG is trying to achieve by ordering that crude oil be sold by NNPCL to local refineries in naira. When the twin issues of zero importation of fuel and buying crude oil in naira are firmly in place, there will not be any pressure on dollar as there will be no need for fuel refiner, importer or dealer to start chasing dollar. When dollar becomes redundant in the oil sector, its value will begin to dwindle and naira will begin to gain to the point that the price of fuel will begin to reduce.
Nigerians only focus on lamenting the high cost of fuel which has pushed all other commodities beyond their reach. And, don’t we have a right to lament hunger and hardship biting at us under the present FG? Yes, we do have a right to lament. But we care less to want to know what brought our economy to its knees. We are not observant at all to know that the skyrocketing appreciation of the dollar against the naira is the handiwork of the ‘aríjẹnímọ̀dàrú’ – those who thrive during chaos. Haven’t we noticed that the more dollar rises against naira, the more fuel becomes more expensive in Nigeria? During Buhari era, a dollar was between 350 naira and 400 naira and fuel price was below 500 naira. Emefiele’s alleged underhand dealings made dollar a scarce currency and when the current administration of President Tinubu came on board, dollar had risen beyond what Nigerians could cope with and price of fuel began to rise along.
President Bola Tinubu’s inaugural speech on May 29, 2023 was not really meant to announce that subsidy was gone. It was meant to announce that the immediate past administration of former President Buhari did not make provision for fuel subsidy payment in the 2023 Budget. The statement ‘Subsidy is gone’ was just an addition to drive home the effect of not having provision for subsidy payment in the budget. Unfortunately, ‘subsidy is gone’ was what the callous coterie of fuel importers and dealers needed to hear as they pushed fuel price up beyond what Nigerians could afford. Perhaps, if President Tinubu had not made the statement, and he had made a provision for supplementary budget to continue the payment of fuel subsidy while making NNPCL the sole importer of fuel, Nigerians would not have been in this precarious economic doldrums as it would be easier, as said earlier, to track what was imported and what was supplied and the amount of subsidy to be paid, thus eradicating corruption in the subsidy regime.
Nigerians have been used to welfarist economy and they have found free market economy that oil sector has embraced a strange bedfellow. Beyond other reforms aimed at placing our economy on a sound footing, what the FG must work on is the policy that will elevate naira to be able to gain 1k, or a little less. This will have significantly reducing effect not only on fuel price but also on other commodities that Nigerians need for their personal, social and business survivals. Who says Nigeria cannot experience crashes in prices of commodities? We may well experience this in this era of Tinubu’s presidency.
Maroof Asudemade, an Editorial Consultant and a Book Publisher, writes from Ibadan.
