CPPE speaks on latest hike in petrol price

“The Nigerian economy is not ripe for full blown deregulation and market principles on all fronts,”Mr Yusuf said.

The Centre for the Promotion of Private Enterprise (CPPE) on Wednesday said the latest increase in petrol price is regrettably “ill timed” and does not reckon with the prevailing difficult economic conditions.

PREMIUM TIMES reported that the petrol pump prices rose to N998 and N1,030 per litre on Wednesday at various outlets of the Nigerian National Petroleum Company Limited (NNPC Ltd) in Lagos and Abuja, respectively.

The recent development comes after the NNPC decided to terminate its exclusive purchase agreement with Dangote Refinery.

In a statement signed by Muda Yusuf, director of CPPE, the think tank said the Nigerian economy is not ripe for full blown deregulation and market principles on all fronts.

He said social, economic and political considerations matter in policy choices.

“Commercial considerations should not completely override these considerations. There is always a place for political economy in the interest of the vulnerable segments of society. The Nigerian economy is not ripe for full blown deregulation and market principles on all fronts. The social cost of such policy choices are typically very high,” Mr Yusuf said.

He explained that this is an economy with very weak social safety nets.

“Over one hundred million people are wallowing in various variants of poverty. There is also an issue of policy sequencing. The present administration has presented an economic stabilisation bill to the national assembly. The bill is expected to bring some relief to the citizens and businesses.”

He said it would have been better to allow the proposed mitigating measures to be activated and gain traction before coming up with the petrol price hike.

“What the economy needs at this time are measures to ease the current economic and social challenges; not policies that would aggravate them.

“It is desirable at this time to urgently cut import duties and taxes by a minimum of 25 per cent on all industrial raw materials, passenger buses of 18 seater and above and cars of 2000cc engine capacity and below,” he said.

The think tank said the customs duty exchange rate should be fixed at a maximum of N1000/dollar to reduce the current prohibitive cost of imports.

“Relevant legislation should be amended to that effect. This is without prejudice to the fiscal policy measures contained in the economic stabilisation plan. The government must be ready to trade off some revenue in the current situation,” he added.

He noted that there is a need to seek to achieve the maximisation of welfare function for citizens and productivity function for businesses.

“The government should not be too fixated on revenue maximisation.”

Background

The NNPC announced in September that it was buying petrol from Dangote Refinery at N898.78 per litre and selling to marketers at N765.99 per litre, shouldering a subsidy of almost N133 per litre.

Meanwhile, it said this arrangement is no longer sustainable.

Sources close to the matter told PREMIUM TIMES on Monday that NNPC is now set to withdraw as the sole off-taker to allow other marketers to directly purchase petrol from Dangote Refinery at the prevailing market price, promoting competition and potentially stabilising supply chains.

As the NNPC is ending its exclusive purchase agreement with the Dangote Refinery, this means the NNPC will no longer be the sole off-taker, and marketers can now negotiate prices directly with the refinery.