Enormous influence of refined crude oil over Nigeria’s economy 

Straight to basics, Nigeria’s economy has economic sustainability pillars (social pillar, environmental pillar and economic pillar) that support her, which rest on the economic indicators that will be mentioned subsequently, and equally discussed very deeply as well. There is no doubt, everyone in the country, both the rich and the poor (educated or not), clearly understands this simple economic factor that involves our levels of education, the employment status of the Nigerian citizens and their respective income. Such pillars involve maintaining honest and transparent accounting operations and regulatory compliance (especially in governance). In Nigeria currently, the people’s financial status has been badly impacted and terribly affected, as a result of the poor management of the economy through bad governance that has lingered over several decades (without much remedy in sight). These have finally gotten to a stage that, even the rising inflation, following an unimpressive handling of the financial system, today threatens  the economy with total collapse and potential declaration of a failed state; as it may not be controlled in the near future. An effective handling calls for a total shift from what the ruling class in the various administrations has become accustomed to in governance.

It is still fresh in the minds of most Nigerians when the present administration removed the fuel subsidy barely a year ago. By the President’s mere pronouncement, prices of commodities and every known mercantile instantly started to skyrocket. There has not been a downward reversal of prices of goods in the markets since then. This singular product line and allied items within the sub-sector in the oil and gas industry totally changed the narrative in the pricing index within the entire economy. To say the least, the prices of refined products that rose with unprecedented trajectory disorganised the entire market pricing mode of goods and services within the economy. The hyperinflation that is currently ravaging the entire socioeconomic order with a completely disrupted market pricing policy; is of course a resultant effect of the impact petroleum products wield over the financial health of the nation’s economy. The ripple effects due to the subsidy removal instantly impoverished a substantial percentage of the Nigerian population because, the weakened purchasing power and the dwindling disposable income of most households reduced the social class of these affected vulnerable paid employees in the employment market (with visibly static remunerations).

The unfortunate aspect of what is affecting the economy is the wrong application of the economic sustainability pillar in the oil sector. Here, the businesses of local investors in local refining operations are least protected by the government. Instead, these local operators suffer disadvantaged competition in the hands of the multinationals and the international oil companies (IOCs) who are irrationally favoured, against the interests of these local investors that end up being frustrated out. This same fate the local refiners suffer is presently being faced by the gigantic Dangote refineries, located around the Lekki corridor of commercial and economic activities. The local refineries are not functioning (including the government owned Port Harcourt that was rehabilitated sometime ago) because the price of the crude is always set high and above market price by the IOCs. It is a disappointing performance that the government does not invoke the full laws of the Petroleum Industry Bills (PIB)  that should protect the local operators in the industry, instead foreign operators are favourably disposed to freely export our crude oil to their home countries, where they refine the crude and bring in the refined products with import licences issued by the government. This operation is done at the detriment of the local refiners, who are left with the tough challenges of competing with the foreign refined products that are far cheaper than the locally refined products. This frustration should be looked into if, indeed, Nigeria is serious about strategically changing the inflationary tide that the oil subsector of the economy significantly influences. This same oil sub sector, also,  determines many pricing issues in our local markets that are causing food insecurity in the country.

The socioeconomic impact of high costs of goods and services is seriously taking a toll on the majority of the citizens, and the government is yet to find a solution to changing this ugly economic challenge. The Nigerian government is therefore urged to be proactive in planning and execution of the nation’s economic policy as it would influence the status of the Nigerian economy in a positive way. If the government urgently follows up on this frustrating battle of non availability of locally produced crude oil to ensure it is sufficiently supplied to the local refineries, like the Dangote Refinery, prices of other items could start coming down. This would be the biggest outcome of having refined products being dispensed at reduced rates all over the country.

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