Fuel price increase: Economics of hypocrisy!

Supporters of the new fuel pricing policy are convinced that it’s a good thing which requires celebrating. It isn’t! The ruling All Progressives Congress (APC) expect Nigerians to trust them, while throwing a previously given trust back in their faces. Before the 2015 elections APC candidate Muhammad Buhari claimed fuel price should be reduced and […]

Supporters of the new fuel pricing policy are convinced that it’s a good thing which requires celebrating. It isn’t! The ruling All Progressives Congress (APC) expect Nigerians to trust them, while throwing a previously given trust back in their faces. Before the 2015 elections APC candidate Muhammad Buhari claimed fuel price should be reduced and said “If anybody says he is subsidising anything, he is a fraud”. Indeed prior to the 2015 elections APC’s mantra was “remove corruption not subsidy”.
Although APC National Leader Bola Tinubu openly congratulated President Buhari for having the courage to remove subsidy, the new pump price isn’t about subsidy. Statements by Minister of State for Petroleum Kachikwu on subsidy removal don’t hold water. Earlier this year the Petroleum Product Pricing Regulatory Agency (PPPRA) released a template showing N12.62k subsidy on N86.50k a litre. With subsidy removal price should be N99.12k not N145!
Vice-President Osibanjo more sensibly claimed the increase is due to lack of foreign exchange for oil marketers. He missed the point. It isn’t about foreign exchange, it’s about trust. APC was voted into office with a change mantra promising to sanitize a corrupt system. Instead of doing this, they are shifting the costs of corruption to the general public. Nothing has happened to fraudsters who made billions putting us in this mess, APC leaders in the Federal Executive Council, National Assembly, and State Government Houses continue to wallow in luxury at public expense, and ordinary citizens are once again expected to make sacrifices. The moral flag APC raised is in tatters.
Regardless of belief in “market forces” Government has a legal and moral duty to protect citizens from exploitation. Rather than abolish “Currency Trading” through which our stolen wealth is converted into foreign exchange and spirited overseas, and which also quite ridiculously determines our exchange rate, government is forcing all citizens to be involved! Resigning themselves to the belief that the nation can only get regular fuel supply when shady anonymous individuals in the foreign exchange and oil importation business are allowed to exploit us under the guise of “market forces”, is an admission of failure. Nigeria now has the highest cost of fuel and the lowest minimum wage amongst all oil producing nations. The new price regime doesn’t stand to reason. It comes at a time when global oil prices have crashed and the rest of the world enjoys cheaper fuel. Also it is inexplicable why the Nigerian National Petroleum Corporation (NNPC) who get foreign exchange at the official rate, should sell at those who paid more. Also it is contradictory for government to assert that price must be determined by market forces and yet maintain the Petroleum Equalization Fund (PEF).
The Chairman Senate Committee on Foreign and Domestic Debt Senator Shehu Sani, said the increase is “most unfortunate, insensitive and punitive”, and “by inflicting this outrageous and unjustifiable fuel price increase on citizens, the APC is taking the goodwill of Nigerians for granted”. He is correct. Good leadership is about effectively managing people and resources, but indisputably since APC assumed office, things have only gone from bad to worse. The value of the Naira has crashed and the costs of electricity, transportation and foodstuffs have increased drastically. Any plea to traders and transporters not to hike their prices is economic hypocrisy. In a free market system businesses are supposed to increase prices when costs’ increase. Indeed Government made an elementary error in economic policy. They should have devalued the Naira and negotiated a new minimum wage before increasing fuel price. Now the horse will be chasing the cart! Workers will demand higher wages which will lead to further spiralling inflation.
Believers in the new pricing policy hope that fuel prices will eventually come down and citizens will feel the impact of additional money being available to government. They are substituting wishful thinking for proper planning. Diesel was deregulated but despite the fall in world oil prices, diesel price hasn’t come down, and despite more money being available to government, was no corresponding increase in the quality of either infrastructure, education, health care or security. Our political leaders have proved themselves grossly insensitive to the plight of the common man and there is no evidence to support any belief that Nigerians are better off with more money in the hands of government and less in their own!  People voted for Muhammad Buhari because of his personal integrity and the belief that if his government has money everyone the nation will see the difference. The Nigeria Labour Congress (NLC) should shelve the idea of a strike. There is no denying they have a point.  Economic reforms must be done with a human face and human heart, it’s just not right that everyone except political appointees, government officials and fraudsters must suffer the effects of poor past leadership. However a strike will only cause more suffering. Nigerians are sapped, ashamed, bewildered, and weak enough as it stands. The opportunity to object will arise in 2019.