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Opposition Mounts Against New Fuel Price

Posted by By Our Reporters on 2005/08/26 | Views: 499 |

Opposition Mounts Against New Fuel Price

* NNPC says subsidy bill choking

The new fuel price regime expected to be unfolded today at the various retail stations across the country was yesterday rejected by various groups including the House of Representatives, labour unions, civil society groups and other individuals.

But the Nigeria National Petroleum Corporation (NN-PC) which made the request for the fuel price adjustment and got approval from the Petroleum Products Pricing Regulatory Agency (PPPRA) also yesterday insisted that the burden of fuel subsidy being borne by the corporation could collapse its operations.
Expressing its opposition to any adjustment of the price of petroleum products, members of the House of Representatives in a unanimous vote condemned the move.

The House also mandated its Committees on Judiciary, Labour and Petroleum (Down-stream Sector), to examine the relevant portions of the PPPRA Act for amendment so that the agency will no longer be able to increase prices of petroleum products without the approval of the National Assembly.

The decision of the House was as a result of a motion of "Urgent National Importance" under Order 8 (2b) of the Standing Orders of the House raised by Dr. Haruna Yerima in which he lamented the hardship Nigerians would further be subjected to if the impending increase of petroleum products prices is effected by the PPRA.

He therefore prayed that the House should intervene by prevailing on the executive not to hike the prices of petroleum products now or in the near future. He urged the House to amend the PPRA Act so that the agency will not arbitrarily increase prices of petroleum products unless, it seeks the approval of the National Assembly.

The motion was supported by Hon. Ibrahim Bawa Kamba who regretted that any increase in prices of petroleum products will have negative implications and will consequently push up prices of foodstuff and other commodities.
He lamented that in the past the advise by the House that the executive should not increase fuel prices had been ignored.

Hon. Jumoke Okoya-Thomas in condemning the impending hike of petroleum products said members of the House will be failing in their responsibilities if they did not stop the executive arm of government from actualizing the increment.

"Wherever you go, you see hunger all over the faces of Nigerians," she said.
From the labour circle, the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) threaten to call workers out to protest the fuel price hike.
The NLC said it has begun consultations with stakeholders on the next line of action.

NLC General Secretary, Comrade John Odah told newsmen yesterday that there was no justification for the fuel increase. He also described government as being insensitive to the plight of Nigerians.

He said the figures drawn up by the NNPC on the deregulation was meaningless as Nigerians have been told in the past that petrol was selling lower than Coca Cola.

"The fundamental issue, which at every point in time we should remove attention from is as a country that has been endowed with oil, is it justifiable that we should be importing refined fuel? We have had governments in this country that has met the needs of the Nigerian people through establishments of refineries. As we talk now about three days ago, the Venezuelan government came up and said that they were going to establish three additional refineries. Two of them were going to have the capacity to refine 50,000 crude everyday while the third was going to refine 450,000 barrels of crude everyday.

“They have been telling us that with liberalisation that the price of fuel will come down, we have not seen these prices come down and there is no indication that people are even prepared to invest in the refineries, the prices are not going to come down they are only lying to us. “By now Nigerians know that we are being deceived at the highest level. I don’t know about the comparison with the telecommunication sector but I do know that even with the telecommunication we use as a yardstick we are being ripped-off and the NCC, which is, suppose to regulate the activities of GSM providers have gone to sleep and these people are just ripping off Nigerians.

“Nigeria if you look at the comparative prices are paying more per second billing in the African country talkless of the world. So people celebrate the fact that we have arrived without putting into consideration the hidden factor.

“After over six years of driving the process of deregulation if from N22 per litre when this government took over it has been increased price and still it wants it to rise, I see no point anybody is making but I do know that this government has not been able to add value to the petrol chemical industries.

The fact that they keep increasing fuel price every other time attest to the fact that is a way of raising fund”, he said.

TUC however warned the Federal Government against further increase in the prices of petroleum products.

"Any attempt to increase the prices will be resisted as we have told the government two years ago that the solution to incessant increases was to establish more refineries,'' Mr. John Kolawole, TUC's Secretary General, told newsmen in Lagos.

"The attitude of government toward building more refineries is lackaidasical. We do not agree that it should leave the regulation of petroleum prices to the private sector.

"We strongly oppose any attempt to leave the fate of the poor masses in the hands of capitalists, especially in areas where the people cannot cope with the forces of profit maximisation,'' he added.

Kolawole urged the government to use the windfall from the boom in the price of petroleum in the international market to subsidise local consumption.
"Naturally, we, as a nation, are expected to be rejoicing at the prices our crude oil is fetching us at the international market.

"The reason why we cannot is because of the wrong economic policy of the government which has swept underground social responsibility as the basis of government,'' he said
Also, the Civil Liberties Organisation (CLO) has vowed to resist the hike in the pump prices of petroleum products because it is unjust, uncalled for and a move to further impoverish Nigerians.

Speaking yesterday during a visit to the corporate head office of THISDAY newspaper, CLO President, Mr. Titus Mann said the group, is already working with other civil society groups and the organised labour to ensure that government does not have its way this time around.

He wondered why government would contemplate an increase in the pump price of fuel when it knows that the slightest hike will make a vast majority of Nigerians poorer as salaries are not being increased while inflation is high.

"The price hike is totally uncalled for, the reasons that government is giving are not credible. I don't know of any country in the world where the dominant commodity that is produced in abundance, the government decides that the price at which it will sell this commodity to its own people must be determined by the world market. I don't know of any," he said.

He said the irony of the matter is that while the hike is hinged on the rising prices of crude oil in the international market, a downward slide in the prices in the world market has never had the slightest impact on local prices of petroleum products.

The CLO boss also wondered why, inspite of the billions of naira pumped into the refineries they are still not working. He argued that it would be wrong to make Nigerians pay for the failure of government.

Mann said the call on the country by some foreign governments and international financial organisations for the removal of subsidies is not in the interest of Nigeria and Nigerians and urged government not to be deceived by such calls.

"All the best performing economies in the world have become what they are because of the lavish and generous subsidies that their governments give their industries and businesses, these same governments are saying that subsidies are dangerous to our economy. It is not true. We are talking of a situation where no aspect of the life of Nigerians is subsidised by the government, none. The only area where Nigerians hope that things can be lighter for them is in the area of energy pricing simply because we produce it in abundance. We are the sixth largest producer of crude oil in the whole world", he said.

However, in anticipation of the new price regime and the possible consequent crisis, motorists in Lagos yesterday embarked on panic buying. Also, some fuel stations shut their gates to buyers.

By yesterday evening, the long queues noticed especially on petrol stations along Ikorodu and Agege Motor Roads caused major obstructions to free flow of traffic.

At Texaco and Total fuels station in Maogoro, motorists scrambled to buy fuel in anticipation of the increase.

Most of the drivers said their fear was heightened by an evening tabloid report. Stations such as Senag and Beco within Oshodi were not selling to motorists by 7.30 pm yesterday.

Meanwhile, the NNPC Group Managing Director, Engr. Funso Kupolokun said the organisation's push for new prices for petroleum products should be seen as an act of self-preservation.

Kupolokun while addressing graduands of the Corporation's Chief Officer's Course 034 in Abuja, said some pertinent issues begging for urgent solution in the downstream sector include the issue of high energy consumption, high cost of refinery maintenance, obsolete technology, vandalization of pipeline facilities and the apparent lull in the privatization of the nation’s refineries.

The high cost of the Turn Around Maintenance (TAM) for the three refineries is not allowing the expected benefits from local production sources to impact on the domestic market, he said.

The corporation said it is presently shopping for about $1 billion to enable it put the refinery plants in sustained operational condition between now and 2007.

Kupolokun said a daily fuel subsidy of N600 million (at N22 per litre) is being incurred to sustain the sale of Premium Motor Spirit popularly known as petrol at between N52 and N55 per litre.

He told newsmen that the corporation has responded to PPPRA’s demand on statistics of the subsidy for its deliberations and that if the prevailing subsidy is not curtailed, the amount of losses to the organisation might reach N238b by the end of the year.

NNPC boss said both the Pipeline Product Marketing Company (PPMC) and the three refineries are operating at a loss with the current levels of tariffs and that “even with direct Federal Government grants to counter losses incurred from the selling at non-market price, NNPC’s viability still remains’ problematic”.

"All we are saying is that the corporation is presently bleeding from losses as a result of fuel subsidy", he said.

He said the continued subsidy is posing a threat to its ability to meet its corporate obligations such as money to offset administrative cost, funding of operational maintenance and infrastructural development in the industry.

The breakdown of the estimates shows that Port Harcourt refinery will need at least $300m while Kaduna and Warri plants are to gulp $250m and $150m respectively.

NNPC plan to refurbish and reposition its product distribution subsidiary (PPMC) is expected to consume the sum of $200m in its facility up-grading drive in the next two years.

Kupolokun gave the current level of operational capacity of the refineries as follows; Kaduna FCC steady at 70%), Port Harcourt (70%) and Warri refinery FCC at 70% refining 87,500 barrels of crude per day.

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Comments (23)

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