On the high cost of goods and services @ yuletide

Nigeria’s present tough economic situation has gone haywire. It is no longer a thing to joke about, especially going by the astronomical prices of basic items that support daily life at this Yuletide, and which involve high frequency of commuter mobility. One fact from Energy Economics, which is termed a natural phenomenon, is that “You cannot separate Energy and Life” because they work together (they work in tandem to complement each others’ function and so, cannot be separated from each other). This is a statement of fact because there is always a price to pay as they function. This singular fact makes our discourse a serious business.

For a fact, prices of commodities usually go up during festive periods like this. But this one is particularly unprecedented because of the hike in energy costs (diesel, gasoline/PMS, kerosene, aviation fuel, cooking gas, among others) that is linked to the rising inflation within the economy. The tumbling exchange rate of our local currency, the naira, appears to be the major cause. The reason being that the epileptic currency exchange rate is directly linked to our travails because of the fact that the pressure on the nation’s foreign reserves (that is constantly being overstretched beyond a comfortable elastic limit) results from the excessive toll it bears. This domestic demand and consumption of these refined products based on the sheer significant volumes on a daily basis, heavily impacts on the economy through importation, being products that are not refined locally.

Whenever this discourse centres on cost and pricing of goods and services in the economy, one very clear thing that comes to mind is how to get around such an issue. A simple economic principle holds in an open market economy (where increased price of goods and services is naturally responded to or seen with an automatic reduction in demand). But this is not particularly so in this situation because ours seem a bit complex considering the other interacting factors that keep defying this particular economic principle and the general rules of the game at macroeconomic level. These factors or “acts” (as identified), among others, are nothing more than the “act of patriotism” by those given responsibility, and the “act of corruption”  that pervades the entire system. Those responsible are the public servants and professionals with the technical expertise who ought to fix things the right way and make life easy and better for the general public who patronise the market for such goods and services. In the same vein, the proper corporate governance structure for consumer protection and price control needs to be manned by committed officers in the service of the nation; who should constantly focus on adjusting rates in favour of the general public through ensuring that infrastructure is properly put in place for seamless local production.

The second identified factor that is linked to our national social life in serving others (the larger community) is self-centeredness (corruption, a deadly social malaise that has eaten deep into the fabrics of our system). With patriotism and selflessness, the economy can move forward, where every public officer put in position to make the oil industry function well, sees to it that the refining equipment undergoing refurbishments are adequately fixed without any further delay. By doing so, the sufferings of the citizens will be reasonably reduced, especially with regard to energy pricing; thus removing any incidents of panic buying of products at any point in time. At Onitsha, to my greatest shock, I personally bought a litre of PMS @N320 a litre, on 29th December 2022!

In the social circle, many may debate on the how, why and what happens presently in the nation’s energy/oil industry; regarding the uncontrollable high costs of all forms of energy products. One fact that needs to be borne in mind is that even though the world energy market may be facing various kinds of challenges (supply and demand), the peculiarity of our own nation should be isolated from them because we are favourably disposed to generate the necessary raw materials (oil and gas) by natural endowment, and so should not necessarily compete, compare or be influenced by other economies (in terms of energy pricing at the global market). This can be done by simply starting and finishing the processing of the products by adding value to the locally sourced raw materials and meet the daily domestic demands (at a specially fixed marginal profits for the government), then export both the raw materials or crude oil and gas ( as usual through upstream operations), and supply the country’s neighbours in the sub-region with the excess stock of the refined products (as net-exporter of refined products, through the downstream sub-sector operations). And this can be done at their respective international pricing rates, to earn foreign exchange.

In this strategy to tackle energy pricing in the economy, the debates on “how”, “why” and “what” would have been addressed. The nation’s economic status should as well be repositioned on its proper footing in terms of economic growth and financial performance that is able to restore the local currency with enough strength for an improved exchange rate, internationally.

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