N400/litre diesel price exposes import-driven deregulation dangers — Experts

By Uthman Salami, Ariemu Ogaga and Matthew Dennis

The rise in price of automotive gas oil  (AGO)  otherwise known as diesel above N400 per litre  and 12.5 kilogramm (KG) of Liquefied Petroleum Gas (LPG) above N900 has exposed the negative effects of subsidy removal  on prices and dangers of import-driven deregulation  extended for implementation  by another 18 months by the Federal Government.

The Trade Union Congress (TUC) and Nigeria Labour Congress (NLC) had proposed to the Federal Government to ensure an improvement in local refining capacity before implementing subsidy removal of price deregulation contained in the Petroleum Industry Act signed recently by President Muhammadu Buhari.

To avert strike announced by the labour unions, the Federal Government had announced  extension  of  the implementation of the removal of subsidy on Premium Motor Spirit (PMS), popularly known as petrol, by 18 months.

The Minister of State for Petroleum Resources, Mr Timipre Sylva, announced this recently while briefing State House correspondents in Abuja.

He disclosed that the government has concluded plans to approach the National Assembly to amend the Petroleum Industry Act (PIA)

However, information gathered by reporters of Nigerian NewsDirect revealed that using the price of diesel and liquefied petroleum gas (LPG) as a yardstick, the priced have failed to reduce after over a decade of  implementing price deregulation contrary to  the position of the government that the price of petroleum products will drop after initial increase.

Nigerian NewsDirect also reports that there are discrepancies in the prices of Automotive Gas Oil in different filling stations as Guinea Gold, AYM Ashafa, NIPCO and MRS were selling at N400, N370, N380, and N370 respectively.

Recall that the price of Diesel was sold on the average of N225 per litre, in some filling stations early January, 2021. In October of the same year, the price had jumped to 25%, making some filling stations to sell the product at N320 per litre.

In different interviews with Nigerian  NewsDirect, the Chairman Nigerian Union of Petroleum and Natural Gas Workers(NUPENG) Lagos Chapter, Mr Tayo Aboyedi and an Oil & Gas Expert, Mr Zakka Bala disclosed that diesel price  increased due to import-driven deregulation of the sector.

On his part, Mr Tayo said, “The problem of diesel increase is as a result of the import driven deregulation. The issue of foreign exchange, international market prices of Crude Oil are major factors to the hike in the price of Diesel.”

He noted that any deregulation that is import driven is not healthy for the Nigerian economy.

He said that the federal government should revitalise and fix its local refineries as the only viable solution.

Collaborating this position, Mr Zakka said there is a fundamental problem with Nigeria’s diesel deregulation.

According to him, “I knew that those who require diesel for different activities have been living in pains. The said deregulation of diesel is a lie that the unprincipled technocrats have told the public. The investors in the sector are merely brief-case investors who are self-centred, that is why the sector has not impacted the common man on the streets of Nigeria.”

He lamented that the claim that prices of diesel will be reduced as more investors enter the market has not been the case in the country.

He advised that the solution to end the reoccurring decimal of diesel price hike is the resuscitation of local refineries in Nigeria.

The experts who spoke to our Correspondent all agreed that local manufacturers and businesses, which largely rely on the product for power generation in the face of epileptic power supply in the country would bear the gnawing effect of the energy crises in Nigeria.

While speaking with Nigerian NewsDirect Sunday night, the former Treasurer of Independent Petroleum Marketers Association (IPMAN), Comrade Ashiru Adebowale disclosed that scarcity of Automotive Gas Oil had been on the increase few days ago.

He maintained that the scarcity is becoming rampant because major depots across the country were not loading.

According to him, “We have challenges of diesel scarcity at our filling stations because most of the loading points do not have the product.”

He added, “Ilorin Depot, Mosimi, Ibadan, Lagos and other government depots do not have diesel as I’m talking to you.”

He noted that only few private depots in the country are loading with increase in the price as they are waiting for their National President to address the nation tomorrow (Today).

Several calls and text messages put across to the IPMAN President, Chief Chinedu Okonkwo received no response as at the time of filing this report.