May 31, 2007

Obasanjo's parting gift to Nigerians: FG hikes fuel price to N75

Source: Vanguard

By Funmi Komolafe, Hector Igbikiowubo, Emma Ujah, Emmanuel Aziken, Victor Ahuima-Young, Emmanuel Ulayi, Abdulwahab Abdulah & Yemi Adeoye
Posted to the Web: Monday, May 28, 2007




*May hit N85;
*NUPENG, PENGASSAN, others kick

LAGOS — BARELY 48 hours to the end of its tenure, the Obasanjo administration, yesterday, effected its sixth increase in the price of petrol in eight years. Petrol now costs N75 per litre from N65— a 15.4 per cent margin, with indications that the in-coming government may move it up to N85 per litre in an effort to keep the level of subsidy within manageable limits.

Similarly, government has increased the price of dual purpose kerosene from N50 per litre to N60 per litre.
Vanguard gathered yesterday, that the decision to increase the price of petrol was informed by the rising cost of crude oil which hit $71 per barrel in the international market last Friday, and the inability of the domestic refineries to refine petroleum products.

Filling stations monitored within the Lagos area were seen dispensing petrol at N75 per litre, while some others were simply shut.

Dr. Oluwole Oluleye, Executive Secretary of the Petroleum Products Pricing and Regulatory Agency (PPPRA), confirmed the increase in prices, saying the rising cost of crude in the international market put the pump price of petrol at N95 per litre.

He said the agency had been battling with the rising subsidy which is now N30 per litre and that government simply could not continue to bear the cost any longer.

Dr. Oluleye recalled that President Obasanjo had capped the price of petroleum products in 2005 and made available the sum of N150 billion as Petroleum Stabilisation Fund (PSF) for management of the subsidy.

“You would recall that the government also made another N100 billion available to augment the N150 billion earlier made available. Although this has not been depleted, we have to manage it in such a manner that it is not totally depleted before we make adjustments,” he said.

On why the adjustments had to be made now, he said the rising prices of petroleum products and crude oil in the international market did not just happen. “The situation has been on for some time now and we have been trying to deal with it. If the refineries and importers are to continue to supply fuel, we have to give the correct signal. We don’t want what happened pre-1999 (long queues owing to acute fuel scarcity) to rear its ugly head again,” he said.

Contacted, a staff of the Ministry of Energy who did not want his name in print, said government was alarmed by increasing prices of petroleum products and crude oil in the international market, adding: “The situation has not been helped by our inability to refine crude oil domestically.”

“President Obasanjo felt it wouldn’t be nice to leave such a burden for the in-coming government. We, therefore, reduced it by N10 per litre. There is still a N20 per litre subsidy and this cannot be carried by the in-coming government. Otherwise, certain projects would be stalled.

“The current understanding is that after Yar’Adua takes over and settles down, he would reduce the subsidy by another N10 per litre, raising the price of petrol to N85 per litre,” he said.

Federation Accounts Allocation Committee (FAAC) at its monthly meeting in December, last year recommended that N360 billion be set aside for petroleum products subsidy in 2007.

The committee in a communiqué issued at the end of its meeting said about N28.333 billion was spent on fuel subsidy monthly in 2006 fiscal year and, therefore, recommended that a N30 billion per month provision be made for fuel subsidy in the coming year.

Due process not followed

Senator David Brigidi, Chairman of the Senate Committee on Downstream Petroleum, expressed surprise at yesterday’s increase in the pump price of petrol, saying due process was not followed.

Reacting to the development in a telephone interview, Senator Brigidi said the management of the Petroleum Product Prices Regulatory Agency (PPPRA) was not qualified to effect a unilateral increase without the consent of representatives of the board including Labour.

“I am not aware that the PPPRA has officially made an increase. PPPRA is not a unilateral body because it requires labour and everybody that is a member of PPPRA to meet and look at the cost profile before they can come out with an increase. I am not aware of any formal meeting yet, though I hear there will be a meeting tomorrow (today),” he said

Major Marketers

Investigations revealed that major marketers of petroleum products in the country had been informed officially by PPPRA to consider an upward review of pump prices as the current crude oil price of $71 a barrel has necessitated an increase in the current ex-depot price.

In accordance with the directive, most petrol stations in the country immediately adjusted their pump prices upwards to N75 per litre.

An industry operator who spoke on condition of anonymity said although most marketers had not received the letter from the PPPRA, directive had gone out to the effect that an upward review of pump prices was inevitable, hence what is experienced at the various filling stations is a follow-up on the directive of the regulatory agency.

Most filling stations visited in the early hours of yesterday, including major marketers like AP, Oando, Mobil, Total, Texaco and Conoil, all followed suit, increasing their pump prices to reflect the N10 increase on petrol.

Labour reacts

The Nigeria Labour Congress (NLC) and the Petroleum and Natural Gas Senior Staff Association (PENGASSAN) denounced the last minute fuel increase by the outgoing administration of President Obasanjo as a wicked parting gift from an insensitive government. They vowed to reject and resist the new prices.

The threat from the trade unions came, even as the Nigerian National Petroleum Corporation (NNPC) declared that it was not behind the recent price increase, saying PPRA was responsible for price adjustment.
The NLC General Secretary, Mr. John Odah, speaking for Labour said the “unexpected price increase” called for its“immediate reversal” to the old pump price, noting that failure to do so will be seriously opposed by Labour.

Odah maintained that though it was unexpected at a time like this, it was not a surprise that the government was raising the price at this time given its antecedents.

He described the out-going government as anti-people, adding that it was not a surprise that President Obasanjo’s parting gift to Nigerians after its eight years of alleged gross mismanagement was another round of increase in fuel prices.

The latest increase in fuel prices, according to him, would not be in the interest of the incoming government because of the multifarious economic, social and labour issues it shall be inheriting from the out-going government.

He said: “The Obasanjo government, given its unpopularity with the masses, would end up compounding issues for the incoming administration. It is a pity that this government is particular about transferring its woes to the incoming government.

“We urge the government to reverse this unpopular act immediately and unconditionally. This is totally unacceptable to us, and we are sure every Nigerian will resist this latest imposition..

“Soon, in fact, immediately after the two-day sit-at-home strike we have ordered, the Congress shall meet and properly and effectively deal a blow to this issue. However, let it be known that we are in full support of an immediate reversal to the old price. It is a sad end to a notorious anti-people government.

“If this government has over the years refused to make the refineries work, they should not make ordinary Nigerians suffer for their incompetence and mismanagement of the system. This is most unfair and untimely,” he added

Also speaking, PENGASSAN President, Mr Peter Esele, said the increase was arbitrary and the union would meet and take action against the decision.

Meanwhile, General Manager, Group Public Affairs of the NNPC, Dr. Levi Ajuonuma, said the organisation had no hand in it.
The NLC is expected to meet soon on the issue.

Also reacting, President of the National Union of Petroleum and Natural Gas Workers (NUPENG), Comrade Peter Akpatason, said the new increase was totally unacceptable and that Nigerians should resist the attempt by the out-going government of Obasanjo to inflict more pains on already suffering masses, less than 24 hours to his departure.

According to Comrade Akpatason who is also the National Trustee of the Nigeria Labour Congress (NLC), “this is a pointer that the out-going President Obasanjo does not mean well for even the incoming government. This will further compound the problems of the in-coming government. We are talking of an incoming government that is faced with legitimacy crisis for which Labour and Civil Society Coalition (LASCO) and other groups like NBA and so on are protesting against.

Why would a government that has less than 24 hours to go be increasing the prices of petroleum products? Why would a government be adding more crises to an incoming government that already has more than enough crises ahead of it? It is unfortunate. They have no explanation for it and will not accept.”

Deputy General Secretary of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Comrade Lumumba Okugbawa, lamented that the new regime of fuel price was a unilateral decision by the outgoing government and lamented that it was unfair for President Obasanjo to increase the burden of the already over-burdened masses of Nigeria less than 24 hours to his exit.

According to him, “we are highly disappointed, it is wrong, unfair, unacceptable and without justification. This is un-imaginable. The man appears to be telling us go to hell and that we cannot do any thing. I hope the government knows the danger of pushing the citizens to the wall. The leadership of labour would meet to consider how to deal with assault on Nigerians.”

NBA kicks against price hike

The Nigerian Bar Association, Ikeja branch, reacting to the increase in pump price of petroleum products described it as an attempt to derail democracy in Nigeria. Also, gubernatorial candidate of the Democratic Peoples’ Party (DPA), Lagos State, Mr Jimi Agbaje, said the increase coming just as the government of President Olusegun Obasanjo was leaving showed that the yet to be inaugurated administration of Alhaji Umaru Musa Yar’Adua would inflict hardship on Nigerians. To this end, he called on Nigerians to resist the increase and other bad policies of the government.

Mr Niyi Idowu, NBA Chairman, Ikeja in his reaction said “this is uncalled for and it is unfortunate that this present government handing over in few days to another PDP member is doing all these when it has already impose unpopular policies on the people increasing their poverty level. Definitely all these are deliberate attempt to engineer trouble and chaos, ensuring that democracy does not flourish in the country.

I am telling you they went on with these bad policies to derail democracy, I, therefore, call on Nigerians to be vigilant and ensure that the present government does not truncate democracy in Nigeria.

Lagos lawyer, Mr. Bamidele Aturu, in his reaction said: “It is sheer wickedness. It is madness. It is an attempt to create chaos and probably to truncate the hand-over because they know Nigerians could resist and there will be protests. It is extremely insensitive. Nigerians will resist this but whatever happens, Obasanjo must go.”

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