by Dakuku Peterside
To be precise from the onset, it is apt to posit that the centrality,
omnipresence and ubiquitous nature of petrol in Nigeria has
elevated it to the status of a deity in our daily lives. We revere this
deity and pray that it never unleashes mayhem on us. Any scarcity
or increase in the price of this deity brings untold hardship to
Nigerians and we are eager to appease it at any cost. We are
hugely dependent on this deity because it is the dominant form of
energy that powers our way of living. We are a petrol-fuelled
economy. We depend on petroleum products for transportation,
domestic generation of power for homes, small and medium
businesses, and mechanised farming.
Over the decades, we appeased this deity with a sacrifice called a
petrol “subsidy”. Recently, the cost of this sacrifice put a knee on
the neck of Nigeria, threatened her with strangulation. To breathe
and survive the strangulation, the new administration took a plunge
and ended the sacrifice. As expected, with the stopping of the
perennial sacrifice the high priests and guardians of the deity are
livid and predicting doom and damnation to Nigeria. The deity has
unleashed severe punishment on the nation . The increase in petrol
price has created hyperinflation, a decrease in real GDP, a cost-of-
living crisis, spike in food prices and a loss of disposable income for
the citizens. The situation as it stands is precarious . Yet is not
intractable. Having opted to stop the deity’s sacrifice, we must work
hard to tame the deity – for a man who wants to wrestle with his
“deity” must prepare for the battle.
Petrol is a crude oil derivative. Fortunately we have it in
abundance. Most Nigerians expect that we should enjoy
some benefits and should be a master of the petrol deity.
Unfortunately, our history shows that this has not been the case.
Instead of mastery over petrol, we have become its slave. This
anomaly is directly linked with our failure to refine crude oil for local
consumption over the years. The failure of the government to create
the right framework to attract investment in refining of crude or
resolve the decades-long collapse of refinery infrastructure has left
us at the mercy of others. Other people process our oil and
determine the price of finished products. For too long, we relied on
imported petrol, subsidised the costs and consumed it even when
there is no need . So we became almost addicted to it. This created
in the minds of our people some entitlement mentality. And we
must worship at the altar of petrol as long as we get it cheaply.
Successive governments fed the beast of subsidy, which made it
grow bigger until it finally threatened our economic existence.
Every government discussed the removal of subsidies, but none
dared to try because of fear of the consequences. Goodluck
Jonathan administration tried but was forced to reverse it. For so
long , most Nigerians- especially those in the low income brackets ,
saw cheap, subsidised fuel as the only benefit they derived from a
morally bankrupt and corrupt Nigerian state. However , when they
woke up recently to the sleaze and alleged corruption of the subsidy
regime, some started accepting the idea of the end of subsidies. At
least to end the corruption anatomy of the so-called subsidy. But
removing subsidy has left the price of petrol in Nigeria to the
vagaries of fluidity and fluctuation of prices in the international
market.
There are five main factors that determine the price of petrol in the
international market, and these influence the price of petrol in
Nigeria. They include: the cost of crude oil from which petrol is
refined ; the cost of the product quoted on Platt, a price benchmark
denominated in USD; the freight rate (cost of hiring a tanker to bring
the product from where it is refined to where it is used, in our case
West Africa); the littering expenses from transhipment and multiple
handling; and Naira/ USD exchange rate. Any change in one or a
combination of these factors will affect the petrol price in Nigeria.
With subsidies gone, we are not protected from these events’ harsh
realities. We do not have control over these factors and forces that
determine the price of petrol. Therefore, we are at the mercy of this
deity.
To survive, we must look for an alternative; fortunately, these
alternatives exist though some may be more expensive . The
government and our universities have been reluctant to research
and explore these alternative energy sources for some inexplicable
reasons. There are several alternatives to reduce or replace the use
of petrol in the country. These alternatives can help diversify energy
sources, promote sustainability, and mitigate the impact of fossil
fuel consumption on the environment. Nigeria has significant natural
gas reserves. Encouraging the use of compressed natural gas
(CNG) and liquefied natural gas (LNG) as vehicle fuels can reduce
the dependency on petrol for transportation. Promoting the
production and use of Ethanol and biodiesel can provide cleaner
alternatives for petrol in transportation.
Promoting hybrid vehicles, which combine internal combustion
engines with electric motors, can be a transitional step towards full
electrification. Encouraging the adoption of electric
vehicles (EV)can significantly reduce petrol consumption. This
involves building the necessary EV charging infrastructure and
providing incentives for EV adoption, such as tax benefits and
subsidies. Investing in renewable energy sources such as solar,
wind, and hydroelectric power can reduce the dependency on fossil
fuels for electricity generation, freeing up more petrol for other uses.
Enhancing public transportation systems, such as buses and trains,
can reduce the number of individual vehicles on the road and lower
overall petrol consumption.
Past administrations ignored these alternatives, and we hope this
current administration will focus on them. The petrol price upward
swing is not going away too soon. This is a justification for some
proceeds of subsidy removal to be applied to investment in viable
energy sources and social services like education, health, and
affordable public transportation. It is a welcome development that
this administration is listening to the yearnings and demands of the
citizens. I salute Mr President for calling for a review of the
proposal to give N8,000 per month to 12m poor Nigerians and
commend the National Economic Council chaired by the Vice
President for coming up with an alternative palliative strategy.
I will argue that although there is room for a well-considered
palliative scheme for the poorest among us, that must not be the
focus, for palliative is merely short-term measures to ameliorate the
sufferings, whilst developing alternative energy is the long-term
solution and must be the focal point of any government intervention.
I cannot emphasise enough the importance of energy production in
any modern economy. Production of goods and services for local
use and export is fuelled by energy.
In the meantime, there are a few things the government must do to
cushion the negative impact of a hike in the price of petrol. First, it
must provide proper Communication. The government is losing the
battle of properly framing this petrol price increase to its advantage.
The dominant frame in the public sphere is suffering – all our people
are seeing and hearing is suffering. The government’s spin doctors
must rise to the occasion and win the battle for the hearts and
minds of the people. This is crucial in transitioning from
dependence on petrol deity and maximising alternative energy
regime . Secondly , even though the government must allow market
forces to determine the price of petrol, it must provide a regulatory
framework and infrastructure to influence the market. Therefore, I
advocate for adequate regulation, price monitoring, price
intelligence (Indicative price versus market price), and some quasi-
interventions when necessary. This is important, especially now,
because we are still a petrol-dependent economy even though we
have deregulated the system and removed subsidies.
Third, implementing energy efficiency measures in industries,
buildings, and transportation can help reduce overall energy
consumption, including petrol and raising awareness about the
benefits of alternative fuels and sustainable practices can
encourage individuals and businesses to make environmentally
conscious choices. Fourth, supporting businesses, especially
SMEs, at this challenging time with the petrol price crisis the
country is facing. The government must provide a tax holiday and
other incentives to help most of these businesses survive. These
businesses are central to our economic activities and must be
protected from collapse.
Furthermore, we must admit that the current challenge in Nigeria
requires a bold energy policy and a seriously informed economic
policy. This time, as hard as it may be on the citizens, provides an
opportunity to get things right and push Nigeria towards the path of
industrialisation and growth. Government must seize this
opportunity to make informed socio-economic choices to cut Nigeria
off from continued service of a petrol deity we do not even know. It
is important to note that transitioning to alternative fuels and energy
sources requires careful planning, investment, and collaboration
between the government, private sector, and citizens. Additionally,
these alternatives’ specific suitability and feasibility may vary
depending on regional factors and infrastructure capabilities.
In conclusion, we must do whatever it takes not to go back to the
subsidy. It is an ill wind that blows no one any good. This is a time
for everyone to unite and push Nigeria to the next level. It is not a
time for scoring cheap political points and doing nothing. Desperate
times call for desperate measures. Our collective duty is to provide
an energy transition that is sustainable and pulls us out of the
shackles of the petrol deity once and for all times.
