Nigeria’s Trilemma: A Struggle with Rising Petrol, Diesel, and Gas Prices

Nigeria’s Trilemma: A Struggle with Rising Petrol, Diesel, and Gas Prices – In recent times, Nigeria has found itself grappling with a trilemma of escalating prices for petrol, diesel, and cooking gas. The soaring prices have left its citizens scrambling for solutions, only to face the repercussions of policies that arguably lacked foresight.

The Shift to Gas and its Implications

When petrol prices soared to a staggering N600 in numerous Nigerian cities, many sought refuge in a novel idea: converting petrol generators to run on cooking gas. However, this alternative is quickly becoming untenable as the price of cooking gas threatens to rise to an exorbitant N18,000 by December.

Such price hikes can be attributed to policies that, while commendable in intent, seemingly lacked adequate consequence management. Nigerians are now bearing the brunt of policies that didn’t quite deliver as promised.

Government Policies and Their Impact

President Bola Tinubu recently highlighted his reforms, notably the removal of subsidies and the unification of various official rates, to attract investments. However, these decisions have inadvertently exacerbated poverty for millions. This is largely due to a sluggish intervention program and an apparent absence of solid strategies to augment the dollar supply.

Following the removal of fuel subsidies, many Nigerians turned to cooking gas as a cheaper alternative. This was further bolstered by oil marketers’ commitment of N10bn to introduce Compressed Natural Gas (CNG)-powered public transit buses. While these steps were positive, there was a noticeable delay in their implementation, with the Presidential Compressed Natural Gas Initiative (PCNGI) only being approved three months after subsidy removal.

Gas Prices and the Reality Check

Olatunbosun Oladapo, President of the Nigerian Association of Liquefied Petroleum Gas Marketers, recently highlighted the alarming trend of rising gas prices. The cost of 12.5kg of cooking gas is set to surge from its current N10,000 to a staggering N18,000. Such prices render the idea of converting petrol generators to LPG economically unfeasible. As Oladapo rightly pointed out, the escalating costs will force many to revert to traditional fuels like firewood and charcoal.

Additional Economic Strains

Beyond the realm of cooking gas, other energy commodities aren’t faring much better. With the price of diesel nearing N1,000 per litre, various sectors, including hospitality, healthcare, manufacturing, and education, will likely face increased operational costs. This, in turn, will have a cascading effect, raising prices across food, transport, and services.

There are now whispers that the government is subtly reintroducing subsidies. Such rumors gained traction with the FAAC report disclosing that over N169bn was used for subsidies.

International Perspective and Economic Repercussions

While many analysts and international organizations, including the World Bank and the IMF, have praised President Tinubu’s reforms, the initial optimism is waning. Nigeria’s recent demotion from a Frontier to Unclassified Market Status by FTSE Russell, due to issues with repatriation of capital, has sent shockwaves through the investment community. This has severely impacted the stock market and currency value, with the naira’s value weakening significantly.

A Nation’s Plea

As Nigeria continues to import energy commodities due to non-functional refineries, its citizens are bracing for even higher prices, especially with global oil prices projected to touch $100 per barrel by year’s end.

The government’s recent introduction of a 7.5 percent value-added tax on diesel has further strained industries. Segun Kuti-George, a representative of the Nigerian Association of Small-Scale Industrialists, voiced the concerns of many, stating that the rising costs pose a genuine threat to businesses.

While reforms are essential for progress, it is crucial that they are meticulously planned and executed. The current situation in Nigeria serves as a stark reminder of the delicate balance that must be struck between policy-making and its real-world implications.