How will you respond if you wake up one morning to be greeted by a hike in the pump price of petrol and electricity tariff? How will the Nigerian people cope with a 100 per cent hike in intra and inter-state transport fares? With the COVID-19 stress already worsening the hunger situation in the country, will a corresponding 100% hike in food prices assist the government in slashing the country’s racing population?
How will our small and medium enterprises respond to the coming fuel market economics, the hairdressers, barbers, and the likes, using generators to power their business?
The plural electricity distribution companies have been smiling to the bank with their high tariff. Yet, the authorities want to further compound the suffering of the political sovereigns, so it seems, by sparking dramatic price increases in essential commodities.
President Muhammadu Buhari’s deputy, Yemi Osinbajo, has said that his principal’s administration will be applying the brakes on Nigeria’s electricity subsidy regime. According to him, Abuja will next year end most of its subsidy payments in the electricity sector estimated at N30 billion monthly. Osinbajo disclosed this at the opening of the 14th Nigerian Association for Energy Economics/IAEE conference in the country’s capital city. He said the Buhari administration is expecting the electricity sector to generate its revenue from the power sector market.
Osinbajo, who was represented by the Special Assistant to the President on Infrastructure, Ahmad Zakari, an engineer, noted that the administration will be investing over $3 billion in the coming years to improve transmission and distribution infrastructure across the country. He also explained that the effort of the administration to reform the energy sector will ensure that it continued to play critical role in the growth of the country’s social and economic well-being.
“Electricity tariff reforms with service-based tariff, has led to collections from the electricity sector by 63 per cent, increasing revenue assurance for gas producers and stabilizing the value chain. It is anticipated that all electricity market revenues will be obtained from the market with limited subsidy from next year as reforms in metering and efficiency with the DISCOs continue to improve.
“Accelerated investment in transmission and distribution, over $3 billion will be out into this sub-segment of the electricity value chain that will put us on the path to delivering 10 gigawatts through the interventions of the Central Bank of Nigeria, Siemens partnership, World Bank and Africa Development Bank, and others”, Osinbajo said.
Last May, President Buhari’s Minister of State for Petroleum, Timipre Sylva, brashly declared that subsidy on petrol will soon be withdrawn. He told reporters there is no going back on the decision because the Buhari administration can no longer afford it.
Sylva pointed out that though withdrawal of subsidy will be painful it will pay off for the poor in the long run, claiming that the present arrangement favours a few rich individuals and firms.
Though the organised labour has been describing the plan to remove subsidy as an attempt to punish the people for the administration’s inefficiency, Lagos Chamber of Commerce and Industry (LCCI) said desirable, warning that the administration needs a stable policy in the petroleum industry.
Despite the frequent public opposition by labour on the sensitive issue, Sylva says “labour and the Federal Government are not on different pages. Even labour understands but what we have agreed is that we need to have an alternative and the process of putting it in place is what is ongoing.”
Continuing, he said, “petrol subsidy removal will come with some pains but the question is, can we continue with petroleum subsidy as a country? If we cannot continue, what options do we have? I think the best is to take out subsidy. From the government of ex-Military President Ibrahim Babangida in the 80s, it has defied all efforts to withdraw petrol subsidy. Diesel is now deregulated, Kerosine is now deregulated but petrol has defied deregulation. Should we continue with this subsidy?
“The Federal Government does not lack courage our President does not lack political will. Who is really benefitting from subsidy? It is confusing. Some people are benefitting but certainly not the common man. Though it does not really benefit the common man, when you try to remove it, the common man comes out to defend it. Now, can we carry on with subsidy if you consider the amount of money swallowed by subsidy? If you want to carry on with subsidy, how do we get the money to fund it? The best way out is to take out subsidy because if we don’t, we will continue to beg the question.”
Sylva may be right in his argument. The major problem is the inflation the action would spark. Since the outbreak of the COVID-19 pandemic, prices have been on the upward swing in Nigeria. In some areas in Abuja, kerosene is selling at between N300 and N400 a liter. A measure of garri (Mudu in Hausa) that used to sell at between N150 and N200, is selling at N500 at Nyanya Market. In Jikwoyi, a cup of beans that was easily gotten at N40 is racing to N120.
A man in Karu the other day bought his regular brand of bread that is far below the quality of the popular Agege bread in Lagos, N100. He returned the next day to pick the same bread. There was a N20 price increase. He asked the seller why the sudden increase in price. She replied him, ‘’things don cost.’’ That is a common refrain from traders these days A young man who used to supply me some bags of pure water failed to deliver last week. On calling him to find out what went wrong, he said, ‘’oga, price don change o because things dey costly for market.’’ That particular pure water is selling at N150 a bag, a 50% hike above the normal deal.
My Achaba (Okada) pilot has similarly adjusted his fare. Where Adamu used to collect N50 from me is now N70 and the longer routes have jumped from N100 to between N150 and N200 a drop. The worse is when rain falls, these Okada guys will literally squeeze out blood from you. The other day, my wife came back from the market with a frowning face. The same amount she went to market with the previous week could only avail her less than 50% of the items on her shopping list. Trust market women, they were making jest of customers who could not afford their price regime because ‘’things don cost’’.
If prices are running riot without the removal of subsidy on fuel and electricity, what will happen when the subsidies are gone? What is happening presently in the foreign exchange market is a pointer to what will be.
For just barely 24 hours after Central Bank of Nigeria (CBN) cut off dollar supply to Bureau De Change (BDCs), Nigeria’s naira saw an unofficial devaluation in the black market on Wednesday. The black market re-prices the local currency exchange rate to N524 to a dollar from N505 on Tueaday. It is, perhaps, in the interest of the profiting vultures in Nigeria for the exchange rate to hit N1,000 for a dollar.
The democracy of the deep pockets, by the deep pockets and for the deep pockets is a governance system that excludes the greater majority, and cares less about their well-being. This could help to explain why social security is lacking in the country. Till Nigeria’s democracy evolves to produce humane leaders, the citizenry will continually be visited with harsh policies that fuel hardship and untold suffering by the exploitative and oppressive ruling circles.