Understanding this Petrocadabra

In the early eighties, Having just secured a loan to buy a car, I strolled into the Volkswagen assembly plant on Badagry Road, Lagos and ordered a brand new Volkswagen Passat for about N4,000 (including all registration and insurance expenses). Three days later, I collected the beautiful chocolate colour ‘tear-rubber’ car and filled the tank […]

In the early eighties, Having just secured a loan to buy a car, I strolled into the Volkswagen assembly plant on Badagry Road, Lagos and ordered a brand new Volkswagen Passat for about N4,000 (including all registration and insurance expenses). Three days later, I collected the beautiful chocolate colour ‘tear-rubber’ car and filled the tank for N11.80 (eleven Naira and eighty kobo).

That was the scene that played out in my mind when I learnt that petrol would now be sold for N145 per litre. If I were to fill the tank of that aforementioned VW Passat today, I would require N8,410 – more than twice the cost of my brand new car in those fondly remembered eighties. But we can’t simplistically compare prices across eras.

So, how do I react to the new regime of petrol pricing? I choose the path of historical analysis. No need reminding ourselves of all those years the vultures ate; roads not taken in the T-junction of development.

In 1973, petrol sold approximately for 8 kobo; in 1976, 9k; in 1978, 15k; in 1982, 20k; in 1986, 39.5k; in 1988, 42k; in 1989, 42k (commercial vehicles) and 60k (private vehicles) – by December 1989, all vehicles uniformly paid 60k. The price increased in 1991 to 70k; in November 1993 under Shonekan’s Interim Government, N5.00 (a 614% jump); and in late November 1993 when Gen. Sani Abacha took over, N3.25.

Once Abacha consolidated his power, he jacked up the price to N15 in 1994, – later reducing it to N11; and hiking it to N25 in 1998. In 1999, the price was reduced to N20 only to be increased the following year to N30 and then brought down to N22. By 2002 it had climbed to N26. In 2003, it was increased to N42, then N50 and in August, N65. The price escalated to N75 in 2007 only to be reduced to N65 in June by the Yar’Adua government. Between 2011 and 2015, the pricing did a yo-yo but settled at N97 and was later reduced to N87 and then N86.50.

Until recently, fuel price was officially pegged at N87.50, although in most parts of the country, especially in the hinterlands outside Lagos and Abuja, it sold for between N100 and N150.
It is important to remember that oil price was $113 per barrel in 2012 and averaged above $100 in subsequent years. Today, oil price is $44 after dipping below 30 dollars earlier this year. Under the previous government, the exchange rate was $1 to N162. Today, exchange rate is officially N199 to the dollar; andN320-N360 in the parallel market. And militants are busy blowing up oil installations thereby reducing production to 1.65 million bpd instead of 2.2 million bpd.
For 26 years, successive governments did not increase the refining capacity of the country. In the last 10 years, even more viciously than the preceding military regimes, politicians descended on the petroleum sector, sabotaged local refining capacity and instituted an import regime hinged on a subsidy system that literally looted the treasury to pay political debts.
It is unhelpful to reduce an issue as crucial as Nigeria’s survival in the face of wasted opportunities to partisan politics. This is not about Jonathan or Buhari. It is about our very survival. Do we want to go the same way that brought us to this pass? Or do we want to confront the monster once and for all and pick ourselves up by our bootstraps?

I am the first to admit that Nigerians are suffering. Times are hard. It is little comfort telling the masses that petrol sells for N211 in Ghana, or N237 in South Africa or N241 in Kenya. A counter-argument is that it sells for N25.12 in Saudi Arabia; N26.69 in Libya; and N34.54 in Kuwait. Also, it is small consolation to the suffering masses that with the fall in the value of the Naira in the parallel market, the proposed N145 per litre is just about 40 Cents.

In a way, I saw this coming when I couldn’t find any provision for petroleum subsidy in the recently signed 2016 budget. The government has opted to stanch the economic haemorrhage by not going back to a system that dished out N1 trillion in 2015 and has so far shelled out N16.5Bn  from April to date to ‘petrol importers’.
I would rather the money was spent on good roads and medicare and power generation; or even higher wages for government workers – which is now inevitable.

When there is open competition in the importation and sale of petrol as this new scheme is poised to ensure, perhaps we will witness what happened in the telecom sector when more players were licensed to challenge MTN’s monopoly. Has SIM card price not crashed to N100 now against the original N20,000?

There are hard decisions to be taken in our road to recovery. Funding the importation of petrol by the CBN will wipe out our meagre foreign reserves. I respect a government that has the courage to take hard decisions even if they are momentarily unpopular. That is the price of leadership. Buhari should stay the course but negotiate with Labour on wage review.

Some professional political bandits even within the ruling APC want to milk the discontent over the price increase to orchestrate protests, thinking that that would paper over their cases at the EFCC. The party’s leadership has its work cut out. Rid your camp of vermin!

However, government messaging on the raison d’être of the new price regime could have been better handled. At a stage it became a veritable petrocadabra – the more you heard the less you understood. Some of the explanations offered by government operatives only added heat without throwing light – until the Vice-President threw in his tuppence which substantially cleared the air.

“Courage”, says Shannon Alder, “happens when you are ready to face the questions you have been avoiding your whole life.”