Chukwudi Ozalla is an Abuja based media consultant. He spoke to CHIKAODI CHUKWULETA on the hike in prices of petrol and electricity tariff. Excerpt:
Recently, there is hike in prices of fuel and electricity tariff, what is your take on it?
Frankly, the hike in fuel pump price and electricity tariff, including stamp duty, VAT, telecom almost happening at the same time may seem a very ‘hard knock’ on the poor masses, particularly at this time of global COVID -19 pandemic which has no doubt affected the entire world’s economy- extending to even developed nations with high standard of living, let alone developing or underdeveloped nations such as ours!
But the sheer reality is that government cannot afford to continue to subsidise consumption in place of production in the face of other contending national demands. To begin with, I think it is pertinent to weigh every available option at the disposal of government before now.
For instance, we should have fixed all our refineries before now and by extension, in addition, construct new modular petroleum refineries across the country. Governance itself is a business. And it must be run by those who can administer and manage state resources effectively.
The downstream oil sector should be fully deregulated so that investors may want to invest with guarantee of getting fair returns. Every rational consumer will appreciate the fact that once there is a removal of Premium Motor Spirit (PMS) subsidy by the government, prevailing market forces, such as prices, demand and supply plus other economic considerations will form interplay to determine price outcome.
For example, if price of crude oil per barrel in the international market rises, foreign exchange and other factors – remember we do still in our unwise wisdom or for whatever reason, export crude oil to refine and turn back to import that same product, now in its refined form.
Given the above referenced scenario, it does not require rocket science to understand that these processes will definitely affect the final consumers at the end of the day. So, my take really is that government should have made adequate arrangement for both sensitisation and provision of palliatives for the most underprivileged consumers.
If truly the trillions of naira being spent on fuel subsidy is going to be channeled to some other more advantageous projects like agriculture, education, health, infrastructure, etc, I have no problem with that, because research has shown over the years that some of our neighbouring countries do benefit more from our government’s subsidy too by way of inglorious activities of smugglers, who buy this product cheaper and smuggle it out to profiteer.
Then, of course, the big men here having fleets of vehicles who also benefit more than an average car owner. Electricity tariff increase, I understand is not targeted at the low consumption users. At any rate, there must be where the government must come on board to cushion the effects of severe burdens of hapless citizens in order not arrest cost push inflation.
President Muhammed Buhari has ruled out any likelihood of returning to payment of subsidy on petroleum, saying it will lead to several negative consequences, do you agree with him?
Like I have earlier stated, that may honestly be the reality on ground. However, I still do believe that there are areas government of the day can bridge the gap to cushion its effect on the poor masses. Thankfully, average Nigerians will be happy to see where the subsidy money will be channeled into practical terms, and not what we term lately ‘audio money or investment’.
Deregulation does not necessarily mean free for all kind of activities. Government must still have a say in marshalling out the road map and set guidelines the key players in the industry should follow. As it is now, it’s only the market forces that can determine the price we buy. The prices could go either way.
Do you think the new increase in fuel price will be of benefit to Nigeria’s economy?
If properly handled, it will benefit the economy in the long run. Because, the huge sum of money being spent to subsidise can now be channeled into other sectors of the economy that will have far reaching direct impact on the citizens. It may not be an immediate result. It requires careful planning and implementation probably in phases. The nation is already over burdened with both internal and external debts running into trillions of naira.
There is widespread of agitation and public outcry over the fuel hike, can this make the government to reverse its decision?
It’s just for government to go back to the drawing board and get all the stakeholders buy-in, sensitization, present clear cut blue print to address the economic situation in the country. The truth is that any economic agenda that does not translate to better or improved living standards of the common masses will be deemed to be effective. There should be on the discussion table, so that they don’t feel shortchanged or taken by surprise.
Do you support the continuation of importation of finished petroleum product instead of the federal government building refineries?
No rational patriotic citizen will support that, except of course, all those who through one way or the other profiteer from such an unhelpful scheme. We should make concerted efforts towards building modular refineries. We should also explore and utilise optimally other various efficient energy sources like solar, compressed natural gas (CNG), etc. It’s abnormal for us to continue to export crude oil, only to go back and import the same product whereas we can refine it here in Nigeria if we deploy the political will to do so.