Baba Alkasim Baba urges labour to review its hard stance on deregulation of the downstream sector

Nigerians across Abuja, Suleja, Kano, Lagos, Enugu and Port Harcourt recently experienced heart-rending petrol scarcity arising from public fears of a speculated increase in the pump price of petroleum, an ugly spectacle which many thought was history.

Not even the often-repeated assurances by the Nigerian National Petroleum Corporation (NNPC) that the ex-depot price of the commodity will not be increased this month could dissuade desperate motorists from thronging fuel stations in search of elusive commodity.

Industry watchers had assumed that the deregulation of downstream oil sector since last March meant that petrol sale would be market-driven, apart from sanitizing the petroleum products supply system and insulating it from intermittent shocks. To a large extent, that had been achieved.

In the past four years, motorists of different social status, ranks, regions and religion were used to driving into fuel stations and filling up their tanks without worrying about queues. Alas, the scarcity hit Nigerians, no thanks to the push-back by labour against the deregulation of the downstream oil sector.

The Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) had always argued that in a market-oriented deregulation, any rise in the pump price of petroleum products would cause inflation and hardship and impoverish Nigerian workers by eroding the value of their earnings.

But government had robustly engaged and countered labour, saying that paying subsidy on petrol was economically unsustainable and the pain of deregulation would just be temporary, explaining that the competition it would create would eventually force down petrol price.

Government had also contended that contrary to labour’s position that deregulation is anti-poor, the subsidy system which deregulation automatically abrogates only favours the rich who consume more of the subsidized petrol with their multiple exotic cars.

Minister of State for Petroleum Resources, Chief Timipre Sylva and NNPC’s Group Managing Director, Mallam Mele Kyari, had maintained this argument in their engagements with labour over time. So how did we get to this dig-dong over subsidy?

The conundrum simply stems from the general belief that as citizens of an oil producing country, Nigerians ought to enjoy very low prices of petroleum products, if not for free, a thinking fueled by government without even factoring the costs of production, refining, and transportation of the oil to end users.

Selling petrol at the lowest possible price meant absence of market-driven process to recover the costs thereby forcing government to defray the costs through paying subsidy bill to marketers which, in no time ballooned to become a monstrous burden on government coffers amid foul cries among many Nigerians.

Oil industry sources said government had to make some quick moves such as selling crude to NNPC for local refining and domestic consumption at a subsidized rate. For example, when the crude at the international market sold for between $10 and $12 per barrel, it was sold to NNPC at $8 which enabled the NNPC to underwrite the subsidy but with the 2004 policy change when government insisted that it should pay at international rate, price for the domestic crude, the subsidy challenge had become intractable.

Notwithstanding, since last year’s deregulation, analysts have praised the federal government for fulfilling its promise allowing market forces to determine the pump price of petrol which has seen the price fall from N145 per litre to N129, swinging to the current N162 in direct proportion to the rise and fall in the price of crude oil in the international market.

Though market efficiency and competition expected to accompany resumption of products importation by private sector marketers have not yet materialized due to scarce foreign exchange, the government ensured that marketers did not fleece members of the public through arbitrary pump price increases.

In the normal deregulated environment, the rise of the price of crude oil to $60+ per barrel would have ordinarily increased petrol’s pump price in the local market. The anticipation of that rise amid labour’s insistence on halting the deregulation process led to the resurgence of fuel queues across some cities.

While NNPC has continued to assure marketers and Nigerians that there would be no increase in the ex-depot price of petrol this month, the market is gradually responding to that assurance with some marketers hoarding the products in anticipation of price adjustment knowing that the 2021 Appropriation Act has no provision for subsidy.

As motorists resort to panic buying knowing that the current price of N162 per litre is unsustainable in the light of market realities, transport fares would automatically spiral throwing hapless Nigerians into greater hardship. The scenario raises serious moral question for labour leaders opposed to deregulation, prompting many to wonder whose fight they are actually fighting. With deregulation, will Nigerians still suffer hardship in the face of volatile international oil prices? Is the temporary hardship of deregulation not better than the permanent hardship of anti-deregulation?

For many Nigerians it is time for labour to review its hard stance on deregulation as the pulse of workers whom they claim to represent presently suggest. They believe labour is alone singing the anti-deregulation song judging by the rapidity at which they have been losing support. For example, former NLC president and ex-governor of Edo State, Comrade Adams Oshiomhole, saw the light and converted into a deregulation apostle. Today, he is on the good side of history.

Also, members of the Civil Societies who were once staunch supporters of labour have begun to backtrack. Just recently, a Coalition of Nigerian Civil Society for Petroleum and Energy Security broke the ranks, cautioning Nigerians against allowing labour to plunge the nation into the unnecessary hardship often associated with acute fuel scarcity.

The convener, Mr. Timothy Ademola, called on labour leaders spearheading the resistance to the deregulation to note that the policy had already stabilized petroleum products supply across the country to the satisfaction of many Nigerians.

Rather than ride against popular public opinion in its opposition to deregulation, labour should urgently review its stance or risk losing its image. Not retracing their steps amounts to prescribing a drug that is even worse and hurts than the ailment.

Kasim wrote from Abuja