*Consequential inflation to hit 1000%, say analysts
By Myke Uzendu
The Nigeria Governors Forum (NGF) has recommended that the price of Premium Motor Spirit, also known as petrol, should be between N380 and N408.5 per litre.
The price band was made known on Wednesday at a meeting of the NGF.
A committee, set up by the Forum headed by the Kaduna State Governor, Nasir el-Rufai, pushed for the price band.
They equally asked for an immediate removal of subsidy from petrol.
El-Rufai explained that the current subsidy regime was unsustainable because smugglers and illegal markets in neighbouring African countries were the beneficiaries.
The position detracts from previous arguments that only the wealthy benefit from the subsidy regime.
This time, beneficiaries were named as smugglers, without prescribing any punishment for officers of the Nigerian Customs Service whose primary duty is to prevent smuggling, but choose to be lax in their duties.
The committee recommended that the removal of subsidies should be immediate to save the nation’s collapsing economy.
The Kaduna State Governor noted that Nigeria, like other Organisation of the Petroleum Exporting Countries members, agreed to a cut in production to keep the prices high, but Nigeria could not fully benefit from the regime because of subsidies.
He said: “Between N70 billion and N210 billion is estimated to be spent every month to keep gasoline (PMS) price at N162 per litre.
“This is below the cost price and the remittance to the Federation Account will shrink to less than N50 billion per month or even zero if this persists.
“We are already at zero. I understand for tomorrow, so this scenario has occurred.
“Why are we keeping the price at N162? We are keeping the price because the Federal Government and trade unions met and agreed to the suspension of some industrial action months back.
“Even though we all supported deregulation of petroleum products prices last year, this agreement was suspended by the Federal Government because of a threat of industrial action by unions.
“This is the root of the problem and now we are back to losing between N70 billion to N210 billion per month.”
El-Rufai further explained that in the 2021 budget, the Nigerian National Petroleum Corporation (NNPC) had committed to remitting a minimum of N120 billion per month to the Federation Account, but it had been unable to do so.
While presenting the recommendation of the committee, he further explained that only about 12 states consumed two-thirds of the petrol, which was heavily subsidised.
He said his committee recommended N408.5 per litre as the appropriate price in the circumstance, but that with concessions to labour unions, N380 per litre could be the minimum.
He stated: “The committee recommends PMS pump price increment from the current N162 per litre to N408.5 per litre (negotiations with organized labour unions).
“N380 per litre (settlement with organized labour).”
This, he said, was necessary to free funds for critical projects and payment of other obligations.
Other governors who contributed to the debate included Gov. Dapo Abiodun of Ogun State, who said the 93 million litres, which the NNPC claimed was consumed in Nigeria daily, was unacceptable.
El-Rufai did not say anything about the price of diesel, kerosene, cooking gas, automotive gas a d other petroleum products.
The fear is that the recommends were skewed in favour of presumed income without analysing the effect on inflation which analysts put at over 1000% and the consequential demand by labour for wage increases to cushion the effects of the inflation.
It was also argued that transport fares across all routes will jump by 1000%, cost of food items by 800%, house rent to jump by 1000%, while as much as 70% of current car owners will not be able to drive their vehicles any longer.