Nigerians have been struggling with the high cost of fuel since President Bola Tinubu announced the withdrawal of petroleum subsidy three months ago.
The subsidy removal led to a more than 400 per cent increase in the price of petrol at the pump. The government promised to provide some relief measures for the masses, but they have yet to materialize.
Meanwhile, the crude oil price in the global market has reached $94 per barrel, the highest level in almost a year. Analysts predict that the price will surpass $100 per barrel as soon as the demand for oil rises during the winter season.
This would normally be good news for Nigeria, as it would mean more revenue from oil exports. However, the deregulation of the downstream sector, also means that Nigerians may have to pay more for fuel in the domestic market.
President Tinubu had assured Nigerians that the fuel price would not increase further, saying that his administration would address the inefficiencies in the midstream and downstream subsectors of the petroleum industry.
The Group Chief Executive Officer of NNPC Limited, Mele Kyari, also said that NNPC Retail, a subsidiary of NNPC, is working to acquire a significant market share in the downstream sector to stabilize the fuel price.
He said that NNPC Retail now controls 30 per cent of the market after acquiring the retail outlets of Oando Limited in December last year.
He added that NNPC Retail would not increase its fuel price and that this would force other marketers to follow suit. He cited an example of how a queue developed at NNPC Retail stations when one company increased its price by N7 some weeks ago in Lagos.
He said that this is the benefit of the Petroleum Industry Act (PIA), which gives Nigerians more choices and protects them from exploitation.
However, some Nigerians are still skeptical about the government’s promises and actions, especially with the fluctuating crude oil price. They fear that they may have to bear more hardship as a result of the subsidy removal.
An economist, Dr Babatunde Adeniran, says that a fuel price hike may be inevitable due to the market forces of demand and supply. He says that marketers adjust their prices based on the realities of the global market.
He suggests that one way to mitigate the impact of the subsidy removal is to explore alternative sources of energy, such as Compressed Natural Gas (CNG). He says that CNG is cheaper and cleaner than petrol and that Nigeria has enough gas resources to meet the demand.
He urges the government to subsidize the CNG kits for vehicles, which would encourage more Nigerians to switch to CNG. He says that this would also reduce gas flaring, which is wasteful and harmful to the environment.
President Tinubu announced in August last month that his government had set aside N100 billion to purchase 3,000 CNG-powered buses for distribution across all states within nine months. However, there is no update on the status of this project.