Published On: Mon, Aug 1st, 2016

Dangers of rising energy cost

At no other time in our history has the country faced the present multifaceted and complicated energy crisis. Virtually every aspect of the energy sector is steeped in one major crisis or the other, which has resulted in increased cost, thereby imposing crushing burdens on the generality of the people irrespective of status and wealth.
Lately, the prices of kerosene, cooking gas, diesel and electricity have gone through the roof, leaving Nigerians with little or no alternatives or remedies. Kerosene, which is the mass product of the petroleum products, as majority of the people use it for both cooking and lighting, has risen from about N120 to N250 and N600 per litre from the official price of N86; just last week the NNPC increased the price to N135 per litre.
Diesel, used by the rich and businesses, has jumped from about N140 to N250 per litre; cooking gas from N2500 to N4000 per 12.5 kg cylinder, and electricity, which has remained epileptic in supply from N18 to N40 per kwh.
When the subsidy on fuel was removed which saw the price rise from N86.5to N145 per litre after months of harrowing ordeal of scarcity, Nigerians thought the worse has passed. The belief then was that it is better to pay higher price if only the product would be available and with competition and adequate supply the price would moderate and eventually come down. Incidentally this seems to be already happening as some stations are selling at N130 per litre.
However, this does not provide any consolation as other products are stealing the palpable joy from this development. As already stated, the current scarcity and high cost of kerosene, electricity and cooking gas, is dangerous and unacceptable because it affects directly the livelihood and living standard o the people. With rising inflation and declining economy a bad situation is compounded.
Poverty is already rampart and widespread in the country with over 62 percent of the population of about 180 million still living under poverty line or feeding on $ 1 per day. Obviously the present problems in the energy sector are caused by government’s apparent mismanagement of the issues.
Official explanation for this situation is the activities of militants in the Niger Delta which have affect gas and crude supply. But the origin goes to the president’s inadvertent and highhanded position on crushing by force the militants after what looked like a vindictive move of practically jettisoning the Amnesty programme. It is the effect, not the cause, that is responsible for the dislocation in supply.
With renewed militant activities, the pipelines which supply gas to power stations and gas plants to produce electricity and cooking gas, as well as supply crude to Kaduna refinery which is the only one producing kerosene is disrupted. Worse still marketers are not importing kerosene because the price is still regulated at N86 per litre.
What sense does it make to keep the price officially at N86 when people are buying at the product N300 per litre. It shows government ineptitude and distorted policy direction by punishing the poor in trying to protect them.
The scarcity and high cost of these products has economic, social and environmental effects. Economically, this will increase the cost of living for people as it affects everybody and raises poverty level. Socially, most people will be forced to adjust to lower cost means such as firewood, coal, charcoal etc., which worsen environmental challenges by increased deforestation and air pollution with attendant greenhouse effect.
To resolve this problem government should return to the basics. We are aware of its change in strategy toward the militants by toeing the line of negotiation. This is commendable but not enough. Government should commit to a marshal plan for the region as we have in the north east to deal with issue permanently. Also government should fully deregulate the energy sector including the pipelines to remove the constant threat to it because of its involvement.
Furthermore, there is urgent need to fully deregulate the downstream sector to infuse competition and ensure availability of products. This is the only way to protect the people from undue exploitation by shylock business people. Resorting to command and central planning economics is detriment to service delivery. Competition, not control, remains the best and equitable guarantee for value and service delivery

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