President Bola Tinubu on May 29 ended the subsidy on fuel. An action that eventually led to a hike in the petrol price from between N179 and N182 per litre to N500 per litre. This has had ripples effects on the cost of living, thus compounding workers’ woes, OPEOLUWANI AKINTAYO writes
Nobody envisaged the turn of events when on May 29, during his inaugural speech, President Bola Tinubu announced that the subsidy on petrol had been removed.
The announcement was what oil marketers, who had been clamouring for “deregulation” awaited to immediately jerk up prices of the premium motor spirit, popularly known as petrol. Gates of most filling stations across the country were immediately shut, fuel tanks closed, and most stations stopped selling even when there was old stock in their tanks.
“How do you want us to get funds to buy new products into our tanks? President Tinubu had said subsidy was over, and if marketers sold at old prices, it then meant nobody would have enough money to order new products because banks were not even willing to give loans to oil marketers. What we will now begin to see is that smaller companies will begin to fold up, and would be bought over by big companies,” a former Chairman of the Major Oil Marketers Association of Nigeria and Managing Director/Chief Executive Officer of 11 Plc, Tunji Oyebanji, told The PUNCH during an interview.
Now that the price of petrol is up to N500, transportation costs, prices of food and other items have shot up tremendously, eliciting anger among workers and the public at large.
The uproar spurred strike threats by the Nigerian Labour Congress and other unions across the country. Workers argued that the subsidy removal, without first fixing the ailing refineries, would be unjust to the masses.
However, oil marketers argued that instead of workers kicking against the removal of the subsidy, they should rather ask for palliative measures.
The NLC said it had proposed a wage award to the Federal Government to cushion the effects of the subsidy removal on workers.
The NLC president, Joe Ajaero, said the proposal was part of the agreements reached with the government during negotiations.
He added that the agreement the NLC had with the government was not on a minimum wage. “The agreement we had with them is a wage award, and it must be understood clearly,” he said.
“We have proposed to them a wage award, which can be implemented immediately without waiting for the statutory period for the minimum wage law or its expiration,” he said.
However, while the NLC and the FG are locked in discussions on what form the palliatives would take, workers have kept lamenting on high costs of living.
For instance, transport fares have shot up by over 200 per cent since subsidy removal. Prices of food items and others have all witnessed phenomenal increases.
A civil servant, Omolola Ayodele, told The PUNCH that life had been unbearable for her family since May 29.
“This is the worst we have experienced in like 10 years. No salary increment and even the meagre salary isn’t coming. This is the height of suffering because life has never been this hard. We can no longer eat to our satisfaction. I have a family of six, and you can imagine that I am a civil servant and my husband is into a small-scale business. The bus fare from Oshodi to Obalende which used to be N500 is now N700. Isolo to CMS which used to be N800 is now N1200. Berger to Mowe/Ibafo is now N700 from N400, and Yaba to Ajah which used to be N700 is now N1,500. That’s the kind of life we are living now,” she said.
Reports indicate that prices of petroleum products have nearly doubled in Cameroon, Benin Republic, and Niger, following the removal of the subsidy in Nigeria. Cheap petrol from Nigeria was regularly smuggled to as far as Sudan, making it difficult for Nigerian authorities to save enough to provide services to the people.
The impact of the subsidy removal is also being felt by the tertiary institutions, such as students of the University of Lagos, Akoka; Usmanu Danfodio University, Sokoto; Ahmadu Bello University, Zaria, University of Nigeria, Nsukka, The Polytechnic Ibadan, Oyo State, among others, are lamenting the consequences of the removal.
A bank customer care officer and a resident at Ifako, Lagos State, who refused to disclose his name, told The PUNCH that transport fare was highest in the mornings during rush hours.
“You know we bankers leave home as early as 5 am, so we can meet the resumption time of between 7 am and 7:30 am. At that time, fares are usually highest because a lot of people would have been out at that time too. Before the subsidy removal, I used to pay N800 to the Island, now it’s N1200 to CMS. How do you reconcile such a huge difference? And guess what? Our salaries have remained unchanged, yet food prices have skyrocketed. My sister, it’s anyhow we can manage. My only saving grace is that I am all by myself- no wife yet, no children. So, it’s anything I see I will manage. I won’t kill myself,” he lamented.
One Mrs Kanu Chinyere, a retailer, said most people, especially civil servants would not be able to go to work if the situation continued.
“Women are now groaning because money given to us for housekeeping can no longer take us through the month,” she said. He added that many husbands had resorted to giving their wives money piecemeal.
According to reports, many private car owners have abandoned their cars due to the high cost of petrol.
“I used to drive my car to work every day but now, I drive it just three times a week, Sunday inclusive because my family and I would go to church,” Stanley Nwankwo, a businessman at Alaba told The PUNCH.
The Managing Director of the Rural Electrification Agency, Ahmad Salihijo, while on an inspection visit to Makoko, a Lagos suburb, over the weekend, said the agency had begun the distribution of free solar home systems across the country as a way to cushion the adverse effect of fuel subsidy removal.
Oil marketers have also pledged to donate 100 mass transit buses, worth N10bn as a way to cushion the effect of the subsidy removal.
While addressing newsmen, the Chairman of the Depot and Petroleum Marketers Association of Nigeria, Winifred Akpani, said oil marketers were aware of the difficulties the subsidy removal had created in the country, expressing optimism that it was going to reposition the country. She noted that Nigeria, in the first three months of 2023, has spent over N2tn, adding, that if it continued with the payment, by the end of the year, it would spend about N7tn.
Akpani said through fuel subsidy, Nigeria had been feeding her neighbouring countries, adding that it could no longer subsidise fuel for African countries while its economy continues to bleed.
“We all collectively agreed that we’re going to work at providing real mass transit buses that work. The ones that run on CNG, or compressed natural gas and diesel interchangeably, and hopefully, we’re going to start with about 50 to 100. And that is in the very, very short term. And these are locally produced.
“So, we’re also providing jobs, a lot more jobs because we’re using local assembly plants, we are not importing this. That is less pressure on our foreign exchange, and that’s more jobs for Nigerians. And Mr President was very happy with that,” she said.
Also, the World Bank recently approved a facility of $800m to cushion the effect of the removal of fuel subsidies on vulnerable Nigerians.
Apart from the efforts of the Federal Government, some state governments such as l Edo and Kwara states, have also implemented strategies towards ameliorating the suffering of the masses.
For instance, the Edo State Government announced the reduction of official working days for civil servants from five to three days a week.
Oyebanji advised Nigerians to cut down the cost of living and unnecessary movements and visits in their cars to survive the current situation.
“This is the time we would know the real fuel consumption of this country because there would be no more smuggling. It would no longer be attractive. And we advise that everyone cuts down unnecessary expenses. It’s not everywhere you go in your car, and we need to even reduce how we pay visits. Instead, we should embrace the use of phone calls and text messages more this time around. We have to cut our costs. We should spend money only on necessary things,” he told The PUNCH during an interview.
In the budget, the National Assembly was allocated N168bn billion. Also, the cost of running the government would take a large chunk of the N10.4 trillion revenue of the Federal Government for the year 2023.
President of the African Development Bank, Dr. Akinwumi Adesina, himself a Nigerian, in his speech at the inauguration lecture, implored the Tinubu administration to reduce the cost of governance, saying, “It is way too high and should be drastically reduced to free up more resources for development. Nigeria is spending very little on development.”