Following the recent circular released by the petroleum products pricing regulatory agency ( PPPRA), an agency under the federal ministry of petroleum resources on the advised price increase of fuel from N140. 80 to 143.80 per litre distributed to all petroleum products marketers is a clear indication that the federal government is not ready to help the masses as the increase will cause more harm to them and lead to serious damages to people's business amidst the negative economic impacts of the corona virus pandemic.
The increase of the fuel price came at a time when the people and their business have been negatively affected with the novel corona virus which requires a serious government attention in assisting the masses especially through subsiding the oil supply for their welfare increase but government ended up increasing fuel price as well as plans for removing the fuel subsidy through deregulation policy in order to allow the market forces of demand and supply to determine the price in the market.
Even though as of the month of June there was a little adjustment of the fuel price from 143.50 per litre to 121.50 per litre. The new fuel price dated 1st July, 2020 represent an increase of N20 compared to the price of the fuel in June. This change of new price of fuel represent a symbolic action of the federal government to torture the masses inform of charging them higher prices.
We don't know whether the federal government is aware of the series of the difficulties and business failure the economic shock caused to our teaming population in different business sectors due to the recent outbreak of corona virus. Some businessmen have lost confidence in future business making after the corona virus have taken away their capital due to lockdown policy and the restriction of movement that caused markets closure and the stoppage of the day to day normal business activities across the country, but the federal government now said to have increased fuel price which must have multiplier and trickle down effect on the people's day live consumption and on the businesses that are planning to return to normal condition.
In this trying time when the lives of the average masses are running in a miserable way and the heavy tax collection by the government imposed on the little hard earning of the citizens is not an option for the government to increase fuel price because it will induce the independent marketers to take an advantage of discomforting the lives of the average masses inform of higher prices without any government assistance. The little income that will remains for their personal consumption and saving after all those tax been paid or deducted will go for the payment of higher prices of goods and services when making purchases due to fuel price increase. Therefore, as the government eased lockdown and lifted ban on interstates movement it should ought to allow the business to flourish, instead of increasing fuel price to torture the masses whom will be the ones to suffer more from the incidence of the increase of the fuel price inform of higher prices.
Also, as the government plans to deregulate the oil sector by removing the fuel subsidy in order to move to market-base pricing regime for petrol. I think this wasn't an option in regard to what it said the removal of the subsidy will ensure the affordability and accessibility of the product on the consumer side and increase the profitability on the supplier's side. If i may ask, how can the government protect the poor from the racketeers in oil sector when the oil sector has been deregulated ? I guessed, removal of fuel subsidy should ought to come at a time when the economy is strong not at a time when the economy is not strong enough to allow the market force to determine price.
In Nigeria allowing the market forces of demand and supply to determine price can not work as efficiently as possible because of the economic dynamic of the country and the inefficiency of the market forces due to the nature of our corrupt economic system. Possibly, there might be the possibility of creating hoarding of the product through artificial scarcity by the business people in oil sector to make more profit.
However, base on what the government said, fuel subsidy regime is associated with many irregularities, to me deregulation should not be the ultimate solution because it can only guarantee adequate supply but with an unwelcome effect of price inflation. So also, deregulating the oil sector will provide the independent marketers an avenue of market window business for a cheaper foreign exchange. This can be sure of that the marketers may prefer to venture in to sells of dollar than to import oil. Not only that, an endless increase in price, cost of production, distribution and the fluctuations of the foreign exchange can cause an unwelcome effect of hardship.
Therefore, Base on my opinion, the illegal acts and misconduct of the few oil importers and the insincerity of the government officials should not be a reason to remove fuel subsidy and increase the fuel price. Let go back to the normal fuel subsidy regime and government do the needful to continue doing its jobs in controlling, managing and regulating the whole system.
Abubakar Garba Mukhtar is an economic analyst writes from Kano, he can be reached via agarbamukhtar@gmail.com. He wrote in via voices@nationalpivot.com.