There are times when the government’s policies and Buhari’s actions are not completely wrongheaded but they are initiatives with bad timing, as they have the tendency to cause immediate discomfort. Under such circumstances I would prefer to describe such action or policy as a “Holy Blunder”. Meaning that it is a good policy, but its timing is wrong. The recent policy on petrol is a holy blunder. It is good the government have made it clearer that they are not removing subsidy and in fact there is no subsidy to remove. Their main goal is to empower the importers to source foreign exchange from secondary sources.
This is to relieve them of the difficulties of waiting on the CBN procedures and at the same time free the government from the burden of giving foreign exchange to importers of petroleum products. This affects Nigeria’s foreign reserves. Good policy judging from this point.
Now the question many people are asking the government is this; why not completely deregulate? Why dictate the price of petrol when government has given importers permission to source for foreign exchange from other sources? To me it is not yet time for government to completely deregulate. A lot has gone wrong in this sector and they must be fixed gradually before the government completely deregulates. We must acknowledge that among the benefits of this policy is that interested investors would now come to introduce competition. But we should also understand that the oil sector is more complex than the Telecom sector. Much politics is played here and the union is stronger here. That means that the presence of much players and competition would not necessarily guarantee the reduction in the price of petrol.
The price of importation and all other market forces would determine what each importer would sell. The government yet has a role to play to make their importation and distribution easy, else there will be disagreements.
Pegging petrol price between 140-45 is not enough. The government is yet to come up with an enforcement plan so as to lower the price as quick as possible and reduce burden on the Nigerian people. This morning in Lagos, the costs of transportation have completely changed to reflect the current petrol price. The transportation fare from Obalende to Ikeja has moved from N200 to N300, some good hearted drivers are taking N250. Sachet water (pure water) has also risen from N10 to N20.
The sellers complain that the cost of going to carry them from the factories has risen this morning because of increase in transport fares. Four roadside food sellers that I visited this morning said they were not going to buy sachet water today because there was no profit in it. Some filling stations along Ajah-Lekki-Victoria Island axis have started to cause artificial scarcity, as many of them have fuel but have refused to sell, some are selling at N145, while a few are selling above the price.
How will the government check these challenges? The Nigerian police and the law enforcement agencies should be completely involved in enforcing this policy. Will the government ensure that these law enforcement agencies support and not sabotage this policy? We hope to see that soon.