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The N97/Litre: Gimmick Or Fact?



If plans by Africa’s richest man remain on course and his petroleum refinery becomes operational by mid-2020, then the face of the downstream petroleum sector will change, and along with it, the pricing template for Petroleum Motor Spirit which is currently imported.

At least half of the charges listed on the current template are imports-related. Today the landing cost for PMS is an estimated N195/litre. And as it has been for last two decades, there is a fight over what that price should really be. It is most likely, however, that the Atiku Abubakar’s presidential campaign team did not have the planned Dangote Refinery in mind when they promised to cut the price of PMS to N97 per litre.

If they did, it would have been obvious to them that the refinery still in construction may not be operational deep into the tenure of anyone elected president in February 2019. A key phrase in the Atiku campaign promise, ‘under the current subsidy regime’ is also an indication that local production didn’t feature in their calculations.

Neither does it seem that getting the existing refineries running was part of their consideration in fixing the price of PMS at N97/litre, if elected into office. What seemed paramount in the promise is what international players in the oil industry have to say.

The PDP presidential candidate is supposed to have a strategic master plan on how to grow and develop the Nigerian economy. But from policy statements made so far, Atiku Abubakar appears to have developed a habit of telling people what he thinks they want to hear.

The policy positions have also appeared to be in response to the everyday policy decisions the APC government is being forced to make rather than a long held strategic plan of action. First, there is the price of PMS against the backdrop of recent revelation on how the government is sourcing subsidy payments.

Then he only found it convenient to announce to the world that a minimum wage of N33,000 has been fixed for his staff after watching the very contentious debate within the government on what the national minimum wage should be. What all this says is that they are struggling to craft a message that will resonate with voters, and maybe even sweep them into power. They are obviously fabricating policy positions as they go along and as a reaction to everyday events.

It was January 1, 2012. Goodluck Jonathan had only barely just won an election and his entire circle of aides was still in a euphoria of victory. But they were in for a rude awakening. The president was barely six months into his tenure when he raised the price of fuel from N65 per litre to N141 a litre.

Occupy Nigeria came to life and his government was crippled for two whole weeks until they brought down the price down to N97 a litre. After that, Jonathan never really recovered politically. But he learnt a crucial lesson. In spite of the pricing technicalities and claims of subsidy, the price of petrol in Nigeria will for a long time remain a political decision.

And so, he put the lesson learnt to the test when he again presented himself to Nigerian voters in 2015. He had not just accepted that the price of fuel was capable of raising people’s passions, the president went further and turned it into a campaign strategy to win reelection. On February 20, 2015, weeks before the presidential election, his PDP government brought down the pump price of petrol from N97 to N87 per litre. It wasn’t enough to save him though.

In 2018, The PDP and its presidential candidate are trying this again promising what they have for years, while in government, been arguing is unsustainable. The party’s national publicity secretary, Kola Ologbodiyan has said Atiku Abubakar, if elected president will reduce the pump price of fuel.

The campaign team he said has consulted with international players in the oil and gas on what should be the appropriate price for petrol and it should be between N87 and N90 per litre. His statement all but lays out their plan for the downstream sector in Nigeria.

Nowhere did the Atiku promise master plan on pricing make reference to the role of the Petroleum Products Price Regulatory Agency. If anything at all, by relying solely on unnamed international players in the oil industry, they’ve rubbished the work of the agency and basically labeled its personnel as incompetent liars.

The promise is also telling in other ways. It is in direct contrast to policy positions taken by this government as laid down by the minister of state for petroleum, Ibe Kachukwu and the short-term plan to upgrade local refining capacity by 2019. Accepted that the Atiku campaign based the promised crash of price on the existing subsidy regime on the landing cost at N195/litre, what mathematical abracadabra are they looking to perform and sell the N97/litre?

In plain language it means only one thing. He is ready to double and triple subsidy payments as a price for being elected president. It’s a bait Nigerians didn’t take in 2015. The difference is Jonathan didn’t promise it, he actually did it. Atiku though, is touting his governing blueprint as the very best of economic policies that will lift Nigeria to prosperity.

Yet, when it comes to oil subsidy, the one issue that has bogged Nigeria down for decades, which the PDP has been central in exasperating over the years, he is willing to give up the sound economic judgement he is promising. It was the same reasoning that led the Jonathan government to spend $2bn meant for arms purchase on his reelection campaign. Make every sacrifice, spend whatever it takes to become president even if it belongs to the commonwealth. 

Atiku cannot extricate himself from the Obasanjo government. When it comes to governance, both he and Obasanjo are two sides of a coin. He was part and parcel of the many decisions made by the Obasanjo government. It’s under their government that the PPPRA, which he is now deriding, was established. During their eight years in power, they increased the price of PMS six times, twice right after winning an election.

In 2004, they raised prices twice. The only years they didn’t increase the price was in 2005 and 2006. And that was because by then, they had lost all political capital to do so. At this point, the entire country had turned against the government after going through the most contentious labour unrest in recent memory.

All the six times the Obasanjo/Atiku team raised the pump price of petrol, it was followed by a general strike by the Nigerian Labour Congress. This was the period when Adams Oshiomhole as Labour leader made a name for himself and eventually propelling him into politics. At every general strike the labour union called for, the country was brought to a standstill. So effective were the strikes, Obasanjo accused the unions of constituting themselves into the opposition party.

To weaken the NLC, the government pushed a bill establishing the Trade Union Congress in the National Assembly. Even at that, Obasanjo and Atiku had become politically too weak to make further increases in the price of fuel, but they were determined to have the last laugh.

On May 27, 2007, two days before the Obasanjo/Atiku presidency were due to handover to a newly elected government, they once again raised petrol prices to the rage and anger of Nigerians. And today, it’s this same team that’s promising to crash prices if given the opportunity to come back to power.

– Shuaibu is a journalist and former Editor of LEADERSHIP



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