Nigerians may be sliding into tougher times with the recent decision of the Federal Government to deregulate the price of Premium Motor Spirit (PMS). While government has hinged its action on the present economic conditions, which are indeed most unpalatable, the prediction of market experts is that the increase in the price of fuel will, in fact, push Nigerians to much worse conditions than ever before.

In the recent move, the price of PMS was increased by over 14 percent, up from N142 per litre to N162 a litre, on account of the government’s inability to continue to subsidise the price of the heavily demanded product.

The government had earlier through the Petroleum Products Marketing Company, a subsidiary of the Nigerian National Petroleum Corporation, NNPC, previously hiked the price, ex depot, from N138.62 per litre to N151.56 per litre.

This action of the government many believe is not only ill-timed but would compound the already excruciating problems of the masses who are already suffering from the harsh effects of the weak economy and the spiraling Covid-19 pandemic which has caused the death of millions of people in the world.

Equally excruciating is the fact that the PMS price increase is coming on the heels of other price hikes which include the Nigerian Electricity Regulatory Commission (NERC) which also recently authorized an increase in electricity tariffs by over 100 per cent and the previous PMS price hike by the Petroleum Products Marketing Company, a subsidiary of the Nigerian National Petroleum Corporation, NNPC, that had seen a spike in the ex-depot price from N138.62 per litre to N151.56 per litre.

Already, the numbers of Nigerians that are statistically considered poor have been estimated to be as much as 82.9 million. This was revealed in the latest Poverty and Inequality Report released by the National Bureau of Statistics, though observers say, even that number may be an undercount.

Actually, some other pollsters, including the World Poverty Clock, have higher numbers. According to the Nigerian Living Standards Survey (NLSS) report released by the NBS covering the year 2019, 40.1% of Nigerians are classified as poor by national standard. The summary report also shows that 52.1% of rural dwellers in Nigeria are poor, while only 18.04% of urban dwellers are classified as poor.

According to NBS, on average, 4 out of 10 individuals in Nigeria have real per capita expenditures below N137,430 per year, which translates to N376.5 per day. The above harsh conditions had been there before the outbreak of the Covid-19 pandemic which heaped more challenges on the people given the almost five months of relative lockdown which disrupted productive activities and supply chains among other challenges that have increased lack in the land.

In the midst of this condition, the most recent official inflation numbers came in with the release of the Consumer Price Index, CPI report by the Nigerian Bureau of statistics (NBS) for June. It rose by 12.8 per cent year on year in June, 0.16 per cent points higher than the rate recorded in May (12.4 per cent) on the back of surging food prices.

The report revealed that the composite food index rose to 15.18 per cent compared to 15.04 per cent recorded in May 2020 while core inflation, which excludes the prices of volatile agricultural produce that now stood at 10.13 per cent in June 2020 compared to the 10.12 per cent recorded in May 2020.

GDP figures, which analysts insist is not adequate for measuring living standard in Nigeria, came in at minus-6.1 per cent in the second quarter of 2020, the NBS report said. Gross Domestic product decreased by -6.10 per cent (year on year) in real terms in the second quarter of 2020, ending the three –year trend of low but positive real growth rates recorded since the 2016/17 recession.

The contraction, though not as bad on paper, compared to what obtains in countries that imposed similar lock downs, bears grave consequences for an economy already battling the headwinds long before Covid-19 surfaced with growth at barely 2 per cent after a biting recession appears inevitable.

Analysts say the contraction is expected to tell on households’ disposable incomes amidst falling purchasing power of the naira. In fact, many agree that there has been a further increase in the prices of food, transportation, medical bills among other household items as a result of the fuel price hike caused by PMS deregulation.

Analysts agree that there will be more misery, adversity and torture as a result of increasing the price of PMS, a product that affects the lives of everybody in the country.  Increasing the price of PMS will in fact, they also said could have ripple effects on every aspect of human life in terms of cost of living.

Prices of all other goods will take a cue from the price of PMS. However, some market observers have explained that the pains will be short lived and normalcy will return when competition is rekindled in the production and supply of PMS. Commenting on the issue, Chief Executive officer of Heritage

Capital Markets limited, Mr. Chidi Ajaegbu told Business Hallmark that the deregulation of PMS which has caused a hike in its price was only going to be a cause of discomfort for a short while.

The former President Institute of Chartered Accountants of Nigeria (ICAN), who explained that the initial impact from the deregulation exercise would be negative on the people, said it was however the way to go as market efficiency will set in after some time and bring down prices. Another economist, Dr. Richard Mayungbe who shares Ajaegbu’s views explained that it was an unpopular decision that many will not like now because of the short time discomfort.

Mayungbe also agreed that despite the short lived hardship it will bring, people will enjoy it much later as prices will come down and the money saved from it will be deployed to build infrastructure. For the Chief Executive Officer, BIC Consultancy, Dr Boniface Chizea, he says that though he supports deregulation, he is advising the government to do it once and for all instead of introducing half measures in the arrangement.

‘’It is also not in order to retain some of the regulatory agencies with their mandate which clearly serves a different fuel price regime and still claim to have deregulated the market for petroleum products.

What are the Petroleum Equalization Fund and even the Petroleum Products Marketing Company still doing in a deregulated environment?

As has been proposed, any regulation that will remain following deregulation should be confined to quality assurance and the need to keep a keen eye to ensure that the oil marketers do not exploit their monopoly to fleece the consuming public by guiding against profiteering’’, said Dr. Chizea in an article he published in an online publication.

Reportedly, the Bishop of Lagos Diocese, (Anglican Communion), Church of Nigeria, Rt. Rev. Humphrey Olumakaiye, has expressed dismay over the recent increase in electricity tariff and price of petrol, calling on the authorities to find a way of making life better for Nigerians.

The Bishop who expressed this view at Our Saviour’s Church, Tafawa Balewa Square TBS, Lagos during the second session of the 34th Synod of the Diocese of Lagos, themed ‘Pray, Serve and Grow’, Olumakaiye  recounted the excruciating pains most Nigerians are going through as a result of the various increases in prices of commodities.

‘‘ It is heart-rending that all these are coming up at a time when we are just trying to get over the hassle brought upon us as individuals and collectively by the much dreaded coronavirus’’.

He said. Minister of State for Petroleum Resources, Chief Timipre Sylva, had on Friday September 4, 2020 disclosed that the Federal Government is not currently in a position, financially, to pay subsidy, as the COVID-19 pandemic had impacted negatively on the country’s finances.

Sylva said the deregulation of the downstream petroleum sector and the removal of subsidy was not a political decision, but had become necessary, especially with the effect of the COVID-19 pandemic, the low crude oil prices and curtailing of Nigeria’s production output by OPEC, which had constrained government’s revenue.

The price increase is coming on the heels of other price hikes which include Nigerian Electricity Regulatory Commission (NERC) which increased Electricity tariff by over 100 per cent and the previous hike by the Petroleum Products Marketing Company, a subsidiary of Nigerian National Petroleum Corporation, NNPC, in ex depot from N138.62 per litre to N151.56 per litre.

Nigerians who were already weary from the harsh economic condition aggravated by the corrosive effect of the Coronavirus pandemic has eroded the means of livelihood of many. Before the ravaging effect of Covid-19, Nigeria had staunchly taken over from India as the poverty capital of the world.

The government also stated that the Federal Government had concluded plans to merge the Petroleum Products Pricing Regulatory Agency, PPPRA, and the Petroleum Equalisation Fund, PEF, into one agency called ‘The Authority’.

Despite all the assurances being given and the accompanying troubleshooting being undertaken by the authorities, anxiety, fear and hopelessness are fast becoming the lot of Nigerians as they face gloomier prospects and increasing hardship every other day.