The Lagos Chamber of Commerce and Industry (LCCI) and energy experts have expressed divergent views on the Labour’s demand that the Nigerian National Petroleum Corporation should not increase the pump price of petrol until the country’s refineries are fixed.
Last week, the Nigeria Labour Congress claimed it had listed key issues that should be addressed before the NNPC would adjust the pump price of Premium Motor Spirit (petrol).
NLC stated specifically that one of such items was that the national oil company must fix the country’s refineries in order to cut down on the importation of refined petroleum products into the country.
In his reaction to the position of labour, the Director-General, LCCI, Dr. Muda Yusuf said it is popular, but it’s neither fiscally nor economically sustainable. He considered it as putting the future of the country at great risk.
According to him, Labour needs to come to terms with the high macroeconomic and systemic risks that the continuation of the subsidy regime poses for the country
He said, “Over the past three decades, the policy of public sector dominance of the downstream petroleum sector had effectively blocked private investment in the sector. The economy is now paying a huge price for decades of an inappropriate policy choice.”
Pointing out the need for Nigeria learn from collapse of the Venezuelan economy, Yusuf said, “Labour and government should come up with creative and innovative ways of cushioning the effects of subsidy removal rather than insist on a policy that could pull down an already fragile economy.
“The country does not have the fiscal space to continue on the current policy path. Labour needs to rethink its position in the larger interest of the economy and the entire citizens of the country.”
Prof. Adeola Adenikinju (an energy economist) said, “The maintenance of subsidy has brought us to a level where we have completely mismanaged the downstream sector.
“It has had a negative impact on our foreign reserves, exchange rate, government revenue, and the capacity of the Federal Government to perform its responsibilities.
“I don’t know why anyone wants subsidy to continue. It has made Nigeria, which is the largest exporter of crude oil in Africa, the largest importer of petroleum products on the continent. It is a paradox.”
Adenikinju said successive governments had tried but failed to repair the refineries.
https://3a28ef70badca166ee0f5edf70042c82.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html He said, “We have refineries gulping billions of naira monthly, producing no oil; employees receiving salaries while doing nothing. We should not continue to support this; we should learn from history.
“Labour should find other ways to hold the government accountable, rather than holding on to subsidy maintenance.”
A public policy analyst and oil and gas expert, Mr Bala Zakka, described the demands of the NLC as ‘completely realistic’.
He said, “If our local refineries become functional, there will be no need for price increase because of the many add-ons during importation such as cost of the vessel, sea transportation, security, insurance, port landing charges, depot holding charges and others will be eliminated.”
Zakka emphasized that focused and organised leaders save their countries from economic slavery.
The Group Managing Director, NNPC, Mele Kyari, said on March 25 that the Federal Government was subsidising petrol with about N100bn to N120bn monthly. NNPC again stated last month that there would be no increase in the ex-depot price of PMS in May.