This past Tuesday, Nigerians awoke to another alarming rise in petrol prices, with the Nigerian National Petroleum Corporation (NNPC) announcing that pump prices have surged to N1,060 per litre in the Federal Capital Territory and N1,025 in Lagos.
This marks the second increase in just three weeks, raising concerns about the impact on everyday life for millions of citizens.
Since President Bola Tinubu’s declaration on May 29, 2023, that the era of fuel subsidies had ended, Nigerians have experienced a staggering 570 percent increase in petrol prices.
Just five months ago, the price stood at N185 per litre when the dollar was pegged at N460.
The rapid escalation of costs reflects the profound consequences of the government’s deregulation policy, which, according to oil marketers, is expected to continue driving prices higher in the short term.
Nigeria’s Minister of Finance and Coordinating Minister of the Economy, Wale Edun, recently stated that both fuel and foreign exchange subsidies have been eliminated, policies that he noted had drained over N10 trillion from the economy.
While the government’s intent to stabilise the economy may be commendable, the abrupt nature of these changes is sending shockwaves through the populace.
As fuel prices soar, so too do the costs of goods and services, exacerbating the already critical challenges faced by ordinary Nigerians.
The burden of this deregulation falls heavily on families struggling to make ends meet, raising urgent questions about the government’s strategy to cushion the impact of such drastic economic reforms.
It is imperative for the Tinubu administration to not only communicate its vision for a deregulated market but also to implement measures that protect the most vulnerable segments of society.
As the reality of higher fuel prices sets in, the government must be proactive in addressing the economic strain on its citizens, ensuring that the road to a more sustainable economy does not leave its people behind.
While the government insists that removing fuel subsidies and liberalising the foreign exchange market are essential to prevent an imminent economic collapse, the reality for Nigerians today is a collapse of their personal and corporate finances.
With inflation soaring to a record 34.8 percent in June—largely driven by skyrocketing food and energy costs, along with the repercussions of the naira’s threefold devaluation in an import-dependent economy—Nigerian citizens find themselves despondent, desperate, distressed, and disillusioned.
The ultimate responsibility of any government is the welfare and happiness of its citizens. Therefore, President Tinubu’s economic reforms must prioritise a human-centred approach.
Many anticipated that local refining would lead to lower petrol prices, particularly with the crude-for-naira sales arrangement designed for local refiners. However, those expectations have quickly evaporated, as this arrangement has provided no tangible benefits to consumers. Prices remain tied to the dollar exchange rate, which has recently earned the naira the unfortunate title of the worst-performing currency in the world.
As the naira continues to plummet under pressure from unmet dollar demand, it is clear that petrol prices will keep rising, even as crude prices cool. This situation exacerbates inflation and the cost-of-living crisis, pushing essentials like food, medicine, transportation, and decent housing beyond the reach of most households. Moreover, local oil marketers face their own crisis, with daily petrol demand plummeting by 92 percent—from 60 million litres in May to just 4.2 million litres in August, according to the Nigerian Midstream and Downstream Petroleum Regulatory Authority. The consequences of these policy decisions are becoming increasingly dire for both consumers and the industry.
The implications of rising petrol prices in Nigeria are far-reaching. The government must take immediate action to alleviate the burdens these reforms impose on citizens and businesses if they hope to realise any potential benefits from them. There are no regulations requiring Nigeria to sell crude oil at international prices within the domestic market. Selling crude at a discount in naira to local refiners could help lower fuel prices, making them more affordable for consumers.
Additionally, any savings generated from the removal of fuel subsidies should be redirected to support the growing number of impoverished Nigerians and struggling businesses that have been pushed into survival mode. The average Nigerian household spends about 59 percent of its income on food, the highest in the world, according to a recent Picodi report. It’s concerning that the Tinubu administration has yet to implement the 150-day tariff suspension for certain food items announced in July. This window should be extended by another six to twelve months to include additional items, particularly cooking oil.
There is an urgent need for tariff suspensions on pharmaceuticals, medical consumables and equipment, educational materials, and industrial raw materials for the FMCG and food and beverage industries. The proposed tax relief for individuals and businesses outlined in the economic stabilisation plan should be enacted immediately. The government must equally reverse the discriminatory electricity tariffs affecting both industries and households, and focus on strengthening the national grid to enhance supply.