Fuel Price Hike: Rafsanjani calls on Government to End Dependence on Imported Oil Products
Auwal Ibrahim Musa Rafsanjani, Executive Director of the Civil Society Legislative Advocacy Centre (CISLAC), has called on the Nigerian government to take advantage of private and modular refineries in the country to end dependence on imported oil products.
Rafsanjani believes that the private and modular refineries have the capacity to strengthen the country’s refining sector, reduce the price of fuel, and boost the country’s earnings.
In response to the NNPC’s recent fuel price increase, Rafsanjani stated that petrol consumption had witnessed a significant fall due to the increase in price. This increase in fuel prices has not only caused difficulties for individuals but also for micro, small, and medium-sized enterprises, which account for a significant percentage of the country’s businesses, employment, and national GDP.
He said, “This has huge implications for businesses that rely on refined crude products like diesel and petrol, respectively. Petrol and diesel prices negatively and significantly affect manufacturing output in Nigeria.”
“In January this year, daily petrol consumption was 62 million litres; February, 62 million litres; March, 71.4 million litres; April, 67.7 million litres; May, 66.6 million litre; June, 49. 5 million litre; and now 46.3 million litres, a 35% reduction. While this suggests reduced demand, it does not suggest a reduced dependence on it. Less people can afford petrol to meet their transportation, home-powering and other needs, and Small and Medium-sized Enterprises (SMEs) are facing difficulties in accessing affordable power.
“This has huge implications for businesses which rely on refined crude products like diesel and petrol, respectively. Petrol and Diesel prices negatively and significantly affect manufacturing output in Nigeria. There are at least 39.6 million micro, small and medium enterprises (MSMEs) operated in Nigeria as of December 2020, accounting for 96.7 percent of businesses, 87.9 percent of employment, and 49.7 percent of national GDP. Totaling about 17.4 million enterprises, they account for about 50% of industrial jobs and nearly 90% of activities in the manufacturing sector, in terms of number of enterprises.
“The trade deficit of $20 million recorded in November 2022 from the low crude oil export receipts signalled the urgency to jettison petrol subsidy, develop local production capacity and end fuel import dependency for a favourable balance of trade. While it is true that no nation has control over the price of crude oil, several measures can be put in place to mitigate the effect of oil price volatility on the country’s domestic economic productivity.
“The current underutilization of Nigeria’s refineries impedes the country’s ability to meet local demand and its economic potential. Nigerians are yet to receive firm commitments, actions and timelines on the delivery of our four moribund refineries to optimal operations. Furthermore, the private and modular refineries have a refining capacity that will strengthen Nigeria’s refining sector, eradicate dependency on imported oil products and lead to improved crude export earnings.”
Rafsanjani also knocked the government for being insensitive to the plight of Nigerians who are becoming poorer by the day due to harsh economic policies, adding that the government must cushion the effect of its decision on fuel subsidy.
“A major effect of the subsidy removal is its knock-on effect on prices of goods and services. Increased transportation costs due to the high fuel prices, directly impact agricultural production and have implications for food security. The government must show real concern and take urgent actions to cushion the effect of its decision which is perpetuating poverty and inequality. This is widening the country’s already-existing income inequality with low-income citizens and vulnerable segments of society facing greater financial strain to meet their basic food needs.
“The government is clearly insensitive to the plight of the growing number of Nigerians slipping into poverty daily as a result of its harsh policy directions. It has so far demonstrated a lack of interest in people centered programs that could help reduce poverty, economic inequality and economic suffering.
“At the same time this government is inconsistent in the application of its “austerity measures” as it is pursuing outrageous, unsustainable, unjustifiable and reckless spendings at the expense of the welfare of its citizenry. Nigerians do not know the economic blueprint of this government and this is the repercussion of the absence of political accountability under President Bola Tinubu right from his campaigns when he refused to participate in the political debates to enable the citizens to track his commitments towards socioeconomic and political reforms that can reduce corruption, poverty, unemployment and improved well-being of Nigerians.”
