The NNPC was founded to harness the possibilities of oil and gas, address energy demand, and drive the national economy. Nigeria’s oil and gas sector has undergone a 20-year effort to reform, with the signing of the Petroleum Industry Act (PIA) 2021 by Nigerian President Muhammadu Buhari. Shell operates SPDC (Shell Petroleum Development Company of Nigeria) and holds a 30% stake in the venture, while the state’s Nigerian National Petroleum Corporation (NNPC) holds 55%, and Total Energies holds 10%.
The Nigerian National Petroleum Corporation (NNPC), the state-owned energy firm, recently announced that it will increase the price of petrol from ₦165 to ₦170 per litre. This decision has generated a lot of reactions and criticisms from various stakeholders, especially the citizens who depend on petrol for their daily activities.
Nigeria’s history of fuel price increase dates back to 1973, during the military regime of General Yakubu Gowon, when the price of petrol was raised from 6 kobo to 8.45 kobo per litre. Since then, there has been a gradual increase in the pump price of petrol, with different governments implementing various price hikes over the years.
Under General Murtala Muhammed in 1976, the pump price increased from 8.45 kobo to 9 kobo per litre, while under General Olusegun Obasanjo in 1978, it increased from 9 kobo to 15.3 kobo per litre.
In March 2020, the price of petrol was reduced from 145 naira per litre to 125 naira per litre by the Nigerian government in a bid to cushion the effect of the COVID-19 pandemic on Nigerians. However, in September 2020, the Petroleum Products Pricing Regulatory Agency (PPPRA) announced a new pump price band of 140.80 naira per litre and 143.80 naira per litre. Since then, the price of petrol has continued to fluctuate, with an increase in March 2023 from 165 naira per litre to 170 naira per litre.
The price hike has been a source of concern for Nigerians as petrol is the primary source of fuel in the country. The increase in fuel price has led to an increase in the cost of transportation, food, and other basic necessities, as transportation is a significant component of the cost of goods and services in the country. The rise in fuel price has also affected the average daily income of Nigerians, which is currently at $5.11, or 2,084 naira per day, according to data extracted from a Q1 2020 report by Bloomberg. This data shows that it takes 6.55% of a day’s wages to afford a litre of petrol.
Currently, The NNPC stated that the increase in price was due to the rising cost of crude oil in the international market, which has made it difficult for the corporation to sustain the current price of petrol. According to the NNPC, the government has been subsidising the cost of petrol, but the subsidy is no longer sustainable due to the country’s economic challenges. The corporation also stated that the new price of petrol is still lower than what obtains in neighbouring countries, such as Ghana, Benin, and Togo, where petrol is sold for between ₦211 and ₦310 per litre.
The decision to increase the price of petrol has been met with mixed reactions from Nigerians. Some Nigerians believe that the increase in price is justified, given the prevailing economic situation in the country. They argue that the government cannot continue to subsidise petrol indefinitely, especially given the impact of the COVID-19 pandemic on the economy. They also point out that the new price is still lower than what obtains in neighbouring countries and, therefore, relatively affordable.
On the other hand, some Nigerians are opposed to the increase in price, arguing that it will further worsen the economic hardship already being faced by many citizens. They believe that the government should find other ways to address the rising cost of crude oil in the international market rather than burdening the citizens with higher petrol prices. They also argue that the government should reduce its spending on frivolous items and focus on providing basic amenities such as good roads, affordable housing, and quality healthcare.
The Nigerian Labour Congress (NLC), a major workers’ union in the country, has also condemned the increase in petrol prices. The NLC argues that the increase is not justifiable given the current economic situation in the country and has called on the government to reverse the decision. The union has also threatened to embark on a nationwide strike if the government fails to listen to their demands.
Petrol subsidy in Nigeria has been a recurring issue, with the total cost of subsidy in January and February 2022 alone being N396.72 billion. Nigeria’s daily petrol consumption has hit a record high of 93 million litres, with major depots such as Nigerian Pipelines and Storage Company Ltd (NPSC), Matrix Energy’s depot, and Aiteo’s depot accounting for 47% of the daily evacuation.
The increase in petrol prices has also led to a hike in the prices of other goods and services in the country. Many business owners have stated that they will have to increase the prices of their goods and services to cover the increased cost of transportation. This will further exacerbate the economic hardship faced by many citizens, especially those living below the poverty line.
Ultimately, the decision by the NNPC to increase the price of petrol from ₦165 to ₦170 per litre has generated a lot of reactions from various stakeholders. While some Nigerians believe that the increase is justified, given the prevailing economic situation in the country, others are opposed to it, arguing that it will further worsen the economic hardship already being faced by many citizens. The Nigerian Labour Congress (NLC) has also condemned the increase and has threatened to embark on a nationwide strike if the government fails to reverse the decision. It is essential for the government to find a way to address the rising cost of crude oil in the international market without further burdening the citizens with higher petrol prices. The government should also focus on providing basic amenities such as good roads, affordable housing, and quality healthcare rather than spending on frivolous items.
References:
- “Earlier this year, Nigerian President Muhammadu Buhari signed the Petroleum Industry Act (PIA) 2021, bringing to a close a 20-year effort to reform Nigeria’s oil and gas sector, with the aim of …” URL: https://www.brookings.edu/blog/africa-in-focus/2021/11/24/nigerias-petroleum-industry-act-addressing-old-problems-creating-new-ones/
- “The Nigerian government has started to make efforts in that direction. In June 2020, it removed the price cap for gasoline and associated subsidies4and established the goal to increase renewable energy power generation to 30% of the installed capacity by 2030.” URL: https://scholarship.law.columbia.edu/cgi/viewcontent.cgi?article=1119&context=sustainable_investment_staffpubs
- “Nigerian National Petroleum Corporation, Nigeria’s state-owned energy firm, has been rebooted as a commercial entity without relying on government funding and direct control.” URL: https://www.rigzone.com/news/nigerian_national_petroleum_company_reboots_as_commercial_entity-20-jul-2022-169697-article/
- “A fresh crisis is brewing in the Nigerian National Petroleum Corporation (NNPC) Limited over the alleged payment of gratuity running into billions of Naira to the Chief Executive Officer…” URL: https://saharareporters.com/2023/04/12/exclusive-fresh-crisis-nigerias-petroleum-company-nnpc-ceo-mele-kyari-chief-financial
- “Nigeria is Africa’s largest oil producer Nigeria’s state-owned oil company has failed to pay the government $16bn (£11bn) in a suspected fraud, according to an official audit. The Nigerian…” URL: https://www.bbc.com/news/world-africa-35810599
