The illegality, immorality and insensitivity of fuel price increase
By Femi Falana SAN
During the campaign last year, the candidate of the All Progressive Congress, General Mohammadu Buhari pledged that if elected as President by the Nigerian people his administration would not remove fuel subsidy. Since he won the election last year President Buhari has consistently resisted pressures from the neo-liberal characters in the government to remove fuel subsidy and increase the price of petrol. On January 18, 2016 the federal government allayed the fear of the Nigerian when the price of petrol was reduced to N86.50k per litre. In justifying the decision people the federal government claimed that the reduction was due to an implementation of the revised component of the Petroleum Products Pricing Template for PMS and household kerosene.
It would be recalled that following the popular agitation against the removal of fuel subsidy in 2012, the Ministry of Petroleum Resources had announced the decision of the Goodluck Jonathan administration to set up 30 green field refineries in the country. Shortly thereafter, the policy was jettisoned due to pressure from the cabal of local fuel importers. In 2013, the Jonathan administration secured a loan of $1.6 billion for the maintenance of the country’s four refineries. At the end of the repairs the refineries could only refine about 80,000 barrels of crude oil per day instead of 445,000 barrels earmarked for domestic consumption. The Buhari administration has also spent millions of dollars for the so called turn around maintenance of the refineries.
Barely a month ago, Dr. Kachikwu had announced that fuel subsidy had been removed through his ingenuity. In celebrating the “success” recorded by him in the management of the petroleum industry he disclosed that Nigeria was saving $1 billion in subsidy removal and $1 billion in fuel importation. He also stated that “for the first time, our refineries are ready to work now. crude has been pumped from Brass to Port Harcourt. Pipeline is being used for the first time in 10 years for the first time in six years. For the first time we are able to pump to Ilorin, we have not done that in 10 years.” (See Nigerian Tribune, March 16, 2016). Curiously, Dr. Kachikwu’s “giant strides” in the petroleum industry appear to have collapsed completely before our very eyes!
Hence, without any public debate or consultation with relevant stakeholders whatsoever the federal government took the Nigerian people by surprise yesterday when it decided to increase the pump price of petrol from N86.50k to N145 per litre. Not too long ago, the federal government had supported the imposition of higher tariffs paid on epileptic supply of electricity by consumers. In sentencing the Nigerian people to excruciating economic agony the Ministry of Power defied a court order which had restrained the government from giving effect to the proposed electricity tariff. In the same vein, the decision to increase the price of petrol is also illegal and contemptuous. In the case of Bamidele Aturu versus Attorney-General of the Federation (unreported suit No. FHC/ABJ/CS/591/2009) the Federal High Court declared illegal and unconstitutional the policy decision of the federal government to deregulate the downstream sector of the petroleum industry contrary to the combined effect of the provisions of the Price Control Act and the Petroleum Act.
In total defiance of the said order of the federal high court the federal government has deregulated the downstream sector of the petroleum industry. In justifying the illegal policy, Dr. Kachukwu claimed that “PPPRA has informed me that it will be announcing a new price band effective today, 11th May, 2016 and that the new price for PMS will not be above N145 per litre.” Since the Petroleum Products Pricing Regulatory Agency (PPPRA) which is statutorily empowered to recommend the price of petroleum products has not been reconstituted the unilateral decision of the Executive Secretary of the body to fix the pump price at N145 per litre is ultra vires and illegal in every material particular. In view of the illegality, insensitivity and immorality of the price increase the federal government should cancel it, revert to the status quo and consult widely with all relevant stakeholders in the society.
However, due to the ongoing fuel crisis in the country the Directorate of Petroleum Resources (DPR) recently invited fresh bids for the setting up modular refineries. At the end of the screening exercise sometime in March this year the DPR announced that it had awarded 22 licences for modular refineries with combined capacities to refine 1.429 million barrels of crude oil per day. If the policy is genuinely pursued the construction of the refineries ought to be completed within the 9-12 months. If such refineries are established in the country the importation of fuel and the fraud associated with it will stop.
In the interim, instead of importing oil from Europe and the United States the NNPC should refine crude oil for domestic consumption in neighbouring countries which have functional refineries. After all, Nigeria refines 60,000 barrels of crude oil per day in Cote d’ivoire which is not an oil producing nation.
If subsidy had been removed over a month ago and the country has been saving $2 billion (from fuel importation and subsidy removal) while the refineries are now working at full capacity Dr. Kachukwu should tell Nigerians the justification for the new removal of fuel subsidy announced by him yesterday. The cost elements that make up the N145 are provocative. If the total landing cost of a litre and other charges are fixed at N138 what is the basis of fixing the price at N145? For goodness sake, why should motorists be made to pay NPA/NIMASA charges, demmwithin and without urage/storage/ bridging charges etc?
At this stage President Buhari ought to prevent neo-liberal ideologues from hijacking the administration for the purpose of punishing the Nigerian people for the looting of the treasury and mismanagement of the national economy. Contrary to the position of the parasitic ruling class that prices of goods and services be fixed by market forces the federal government has a legal obligation to protect the people from exploitation. For instance, the virtual collapse of electricity supply has forced many corporate bodies and individuals to invest heavily in generators and diesel throughout the country. Although the price of diesel has crashed all over the world it has continued to increase in Nigeria due to manipulation. The federal government should, as a matter of urgency, abolish the monopoly in the importation and sale of diesel. There is no justification for the monopolistic control of goods and services under a free market economy!
FEMI FALANA, SAN