By Peter Uzoho
The Chief Executive Officer of the Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane has predicted that Nigeria’s economy will perform better in 2021, compared with the current year.
Rewane, who is also a member of the Presidential Economic Advisory Council, equally called for an interrogation by Nigerians of the recent hike in pump price of petrol in the country without a corresponding increase in crude oil price.
Speaking on a programme monitored on Channels Television, on the latest increase in petrol pump price to N170 per litre, the FDC chief said there was need for Nigerians to ask questions about why there was increase in petrol pump price even when the oil price did not increase.
The Nigerian National Petroleum Corporation (NNPC) through its marketing arm, the Petroleum Products Marketing Company (PPMC) had last Friday, increased the ex-depot petrol price (the price at which PPMC sells to marketers at the depots) to 155.17 from the N147. 67 it was in September/October.
This triggered the hike of petrol pump price to N170 per litre from the previous N160, as there is normally a differential of between N12 and N15 between the ex-depot price and the pump price.
However, Rewane, who noted that the essence of deregulating petrol pricing was to allow market forces determine the price of the product, wondered how the increase was arrived at.
He said: “The objective (of deregulation) wasn’t to increase the price. The object is to free the price from control. So if the price of crude increases, then refined products price will increase. If the price of crude declines, as well, we will see a reduction in the price of refined products.
“The question is that, when in October, we saw a decline in the price of crude to about $35, $36, why did we not see a reduction in the pump price of refined products?
“So, that’s the question that we need to interrogate and say, what happened? And so, what we will do is to look at the template (Petroleum Products Pricing Regulatory Authority’s template) and see exactly what happened when the price of crude declined and we didn’t see a reduction in the price; and now the price of crude is increasing and we are seeing that.
“So, like I said, it’s a template and we need to interrogate it to see whether it has been efficient.”
He also said one other element of the petroleum products marketing that has not been fully deregulated was access to foreign exchange, saying private importers of petroleum products do not have access to foreign exchange.
Rewane disclosed that it was the Economic Advisory Council that advised government to deregulate petrol price, so that it would be controlled by market forces.
He, however, said another question Nigerians should be asking government was what it does with the funds freed from petrol subsidy.
On his prediction for Nigeria’s economy come next year, Rewane expressed optimism that the economy would be better than that of 2020, citing some positive developments locally and internationally as bases for his projection.
“I can say confidently that 2021 is going to be a better year than 2020 because of all the difficulties. And thank God we have a change in the United States.
“Also, with the Chinese/Asian Free Trade and when we are also having our African Continental Free Trade Agreement.
“And hopefully, the borders will open; and hopefully, we will have some adjustments to the exchange rate to make it much more efficient so that people can get foreign exchange when they want it,” Rewane said.
He further said: “The monetary policy will be much more forward-looking and impactful. So, all of these things put together, I think we will have an economy that takes off next year.
“2021, I think, with the vaccine, it will make sure that we are not going to be killed by COVID.
“Two, I think that with the cost reflective tariff, there is going to be more investment in power and then power is going to be more stable in 2021.
“I think that with the completion of the Dangote Refinery and Petrochemical plant, we are going to have some hope in the petroleum side.
“And I think that some sanity will return to the foreign exchange market and money markets so that things become more liberal.
“So, all that said, I think we could see growth of about 1.4 per cent at the end of 2021 with some luck, honestly.”