Early this year, the nation suffered yet another round of petrol supply problem. It took the intervention of the then acting president, now president, Goodluck Jonathan, to resolve the crisis. Though the crisis has been resolved, at least for now, the underlining problem of petroleum subsidy has not been resolved. The president has kept mum on the issue. The posture that has been adopted by the president is similar to that of the late president, Umaru Yar’Adua – accepted principle that deregulation should happen, but a seemingly dithering attitude on when it should happen.
Recently, two prominent personalities in government reiterated that, in principle, price control at the pumps is simply a waste of government’s resources. Olusegun Aganga, the minister of finance, and Lamido Sanusi, have weighed in positively on deregulation.
We believe it is now settled in government that deregulation will happen. What is not so clear in government is when this will happen. Government appears now convinced that price control of petrol at the pumps is not benefiting the poor man but just a few that import and others in government that connive with them to exploit both the government and the citizens.
We believe that plans for some investors to build refineries in the country are predicated on the implicit commitment given to them by the government that the price of petrol prices will be deregulated. However, government cannot continue to wait for the perfect time for deregulation because there is no perfect time. We believe, and strongly too, that the appropriate time is now to stop that charade called subsidy.
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All over the world, there has been radical move away from subsidizing consumption. If government wants to lessen the burden on the masses, it should find a practical way to subsidize production. We also believe that deregulation of petrol prices at the pumps will lead to investments in the downstream oil sector which means that deregulation should not be and we do not expect it will be the end. It is only a means to increasing investment, growth and jobs in the downstream oil sector. These increases cannot happen now because the price control is creating distortions in risks, costs and margins.
What is needed for deregulation to happen? It is a mere pronouncement by the government that it will cease to subsidise payments to those that import petroleum products into the country. Expectedly, prices will go up, but all other measures aimed at improving the economic environment for competitiveness in the sector should help stabilize the downstream sector in a matter of months.
For as long as we continue to import petroleum products, for so long shall we be helping other countries to maintain their employment levels, and transferring jobs that should be within our country.
For too long now, we have belaboured and overflogged the issue of petroleum products subsidy at the pumps. The Jonathan-led government has the greatest opportunity to end this cycle of dithering and deregulate the remainder of the petroleum products that are not yet deregulated. The appropriate time to do so is now.
