Petrol holds Nigerian economy hostage as crisis disarms officials

• Price hikes destabilise businesses, homes
• Scarcity drives managers, consumers nuts
• Economy disconfigured by petrol crisis 
• Ricochet of President’s May 29, 2023 one-liner

ONOME AMUGE IN LAGOS, NIGERIA

The Nigerian economy is in a hostage situation and petrol, the product from fossil fuel that both government officials and a less discerning general public like to call premium motor spirit (pms), is armed to the teeth and doing the economy, businesses, the heads of managers, and the general public in.

The decades long crisis caused by petrol has boiled to a crescendo in a little over a year following the inauguration of President Bola Ahmed Tinubu’s government on May 29, 2023 when he unceremoniously and in a non-policy based pronouncement announced “subsidy is gone” triggering an avalanche of economic upheavals that have refused to go away. 

The Bola Tinubu administration, once afloat on a sea of ‘Renewed Hope’ promises, has found itself adrift on choppy economic waters. Instead of charting a course to prosperity, the country’s economy has become the Titanic of the African continent, with each passing week delivering an iceberg of economic disaster. 

While President Tinubu was abroad seeking to deepen economic partnerships with China, Nigeria found itself thrown into a historic fuel crisis at home. With the president, who also serves as the minister of petroleum resources absent, the nation’s oil sector was left vulnerable, and the country reeled from shortages and soaring prices. 

The removal of petrol subsidies by President Tinubu dealt Nigerians, businesses and the economy a hard blow, but the worst was yet to come. As citizens struggled to adjust to the new reality, petrol prices escalated recently, from N600 to upwards of N900 per litre and above at fuel stations across the country, including those operated by the state-owned Nigerian National Petroleum Corporation Limited (NNPCL). 

The economic troubles of the NNPCL had a devastating ripple effect throughout the nation’s economy. The revelation of a $6 billion debt to its suppliers led to a major disruption in fuel supplies, with the state-owned oil giant finding itself in the midst of a rapidly deteriorating situation. As petrol deliveries fell short of demand, Nigerians found themselves facing a crippling fuel shortage that lasted for more than a month, the effects of which were felt across the entire country.

A recent investigation by Business a.m. found that petrol stations in Lagos and across several states in Nigeria were charging over N1000 per litre for fuel, adding to the chaos of an already severe fuel crisis. As the situation deteriorated, black market operators wasted no time in exploiting the desperation of Nigerians, hawking petrol on the streets for as high as N1,300 per litre. 

The Dangote Refinery, intended to herald a new era of economic growth in Nigeria, recently declared its readiness to release products to the market, a moment that should have been cause for celebration. Instead, the news was met with mixed emotions as many Nigerians began to question the refinery’s ability to alleviate the nation’s longstanding fuel crisis. 

Amidst the ongoing struggles with scarcity and price hikes, the Dangote Refinery’s promise of economic prosperity has been greeted with cautious optimism, leaving Nigerians wondering if the much-anticipated project would be the game-changer they had been promised.

On its part, the NNPCL, has clarified that the petrol lifting from the Dangote Refinery, set to begin on September 15, may not result in lower fuel prices for Nigerians.

Addressing the expectations for the upcoming petrol lifting from the Dangote Refinery, Olufemi Soneye, NNPCL’s chief corporate communications officer, stressed that the global market ultimately dictates the pricing of petroleum products, including those from the new refinery.

As a consequence, doubts remain about the Dangote Refinery’s capacity to fully meet the nation’s fuel demands and alleviate the ongoing fuel scarcity and price hikes.

President Tinubu, in response to the recent petrol price hike, stated that the increase was part of tough decisions necessary for economic progress. 

The president, who made the remark during a meeting with Nigerians living in China, explained that the move was part of his administration’s plan to build a solid foundation for long-term economic growth.

President Tinubu, in a statement issued by his former spokesman, Ajuri Ngelale, stated, “Nigeria is going through reforms, and we are making bold, unprecedented decisions. For instance, you may have heard about the recent changes in fuel prices back home.”

The president further emphasised the importance of bold decision-making for the country’s growth, asserting, “How can we achieve progress if we shy away from making difficult choices? The more we demand things for free, the costlier and more delayed real development becomes.”

The fuel crisis, a catalyst for widespread public unrest, has shone a harsh spotlight on the nation’s economic vulnerability, galvanising labour unions, civil society organisations, and everyday citizens alike in a common outcry for a strong, effective leadership in a resounding call for decisive, capable leadership to guide the nation out of the chaos as it seems the current administration is lost in a fog of confusion on how to bring stability to the troubled economy.

For businesses in Nigeria, the times are as dark as the clouds on the economic horizon. From small startups to multinational corporations, businesses are feeling the painful squeeze of energy costs and government reforms that appear to be working against them. For some companies that have weathered the storm for years, the recent fuel price hike feels like a fatal blow that could spell the end of their struggle for survival. In a country where the climate is already hostile for businesses, this latest challenge seems to be the final nail in the coffin for many.

The ripple effects of the recent petrol price hike have left families and businesses in Nigeria reeling, as they contend with the harsh realities of a skyrocketing cost of living amidst the rising tide of public discontent. 

In the face of rising fuel prices and the economic strain this is causing Nigerians, the Nigeria Labour Congress (NLC) has taken a strong stance against the new petrol price regime, rejecting any government actions that could exacerbate the country’s hardships.

Following a virtual National Executive Council (NEC) meeting, the NLC released a statement calling for an immediate reversal of the recent petrol price hikes. The union, representing millions of workers across the country, demanded that the government halt any further increases in petrol prices, citing the deepening hardships faced by Nigerians and the threat of widespread unrest if the situation is not resolved.

The union, in a communiqué signed by its president, Joe Ajaero, reaffirmed its opposition to any hidden plans to increase the price of petrol. The NLC’s National Executive Council, representing the workers and unions under the NLC umbrella, implored its members and all Nigerians to remain alert and ready to defend their rights against any such action by the government.

The NLC expressed concerns about the intentions of the state, pointing to the possibility of further price hikes and increased suffering for Nigerians. The labour movement pledged to stand firm in its fight for justice, fairness, and the rule of law, emphasising its commitment to resisting any attempts by the government to exploit the masses through concealed price increases.

“The Nigeria Labour Congress (NLC) remains committed to defending the rights and interests of Nigerian workers and the broader society. We will continue to stand firm against any attempts to undermine the Labour movement or infringe upon the rights of our leaders and members. We urge our Civil Society allies to continue increasing their support as we mobilise to nip the present incipient danger and undemocratic actions against our nation in the bud. A people united, can never be defeated! Workers united, can never be defeated,” the NLC communiqué read.

On its part, the Lagos Chamber of Commerce & Industry (LCCI) underscored the severe impact the recent fuel price hike would have on businesses across Nigeria, citing its negative effects on all aspects of commercial activity, from supply chain logistics and transportation to power generation and factory operations.

Chinyere Almona, the LCCI’s director general, in a statement warned of dire consequences for businesses in the wake of the petrol price hike. 

Almona predicted that the cost of doing business would soar, leading to a surge in product prices. She also noted that faced with weakened consumer purchasing power, many firms would be forced to shut down, resulting in significant job losses. The ripple effects of the petrol price hike, Almona predicted, would have a wide-ranging and devastating impact on the economy, with businesses bearing the brunt of the crisis.

Despite the NNPC’s precarious situation and the mounting debt owed to suppliers, the Lagos Chamber of Commerce & Industry expressed cautious optimism regarding the Dangote Refinery’s fuel and diesel production as a potential means of mitigating the severe impacts of the fuel crisis. 

“This game-changing intervention could restore some stability to the oil and gas sector, which has been grappling with significant distortions this year,” the chamber stated.

In light of the fuel crisis in Nigeria, the LCCI advocated for a long-term, sustainable solution to mitigate the country’s reliance on imported fuel and ensure stability in the local economy. The chamber proposed the development of additional local refineries to process Nigeria’s crude for local consumption and potential export across Africa as a vital step forward.

The LCCI stated further: “As an immediate intervention, it would be beneficial for the Port Harcourt Refinery to commence operations alongside production from the Dangote Refinery.

“Given the current challenges with importing refined fuel, relying on local production may be the most viable option at this time.

“We recommend sustaining local supplies, with the expectation that demand will eventually align with supply, leading to equilibrium pricing across various sources.”

In response to the fuel crisis, the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) urged the federal government to engage in open and constructive dialogue with key stakeholders, including the private sector and organised labour, to find a feasible solution that takes into account the concerns raised by the recent price hike and its potential impact on the economy.

In a statement issued by Dele Oye, the national president, NACCIMA, the association expressed deep concerns over the recent hike in petrol prices at NNPC stations across the country.

“While we understand the complex factors that can influence fuel prices, such as global oil market dynamics and exchange rate fluctuations, we are troubled by the lack of prior notice and clear explanations provided by the government and the NNPC regarding this development.

“The timing of this price hike is particularly concerning, as it has the potential to further exacerbate the impact on businesses and consumers, especially the vulnerable segments of the population and those on fixed incomes, who are still adjusting to the recent increase in the national minimum wage,” NACCIMA stated.

Recognising the need for greater transparency in the management of Nigeria’s oil sector, NACCIMA stressed the importance of public confidence in the state-owned NNPC. The chamber called on the authorities to provide clarity regarding the conflicting statements on the NNPC’s profitability and financial obligations.

In doing so, NACCIMA underscored the need for transparency and accountability in the NNPC’s operations, noting that these values are essential for building trust between the government, the private sector, and the Nigerian people, especially in light of the ongoing fuel crisis.