In these uncertain times of COVID 19, the last thing that Nigerians needed was a hike in petrol and electricity costs. Both are essential services for any modern society to keep operating. Furthermore, increases in these two services always lead to inflation in costs of essential goods. In the first week of September 2020, the Petroleum Products Marketing Company (PPMC) announced a new Ex-depot price of N138.62 per litre for petrol. In addition, the government has also hiked electricity tariffs from N30.23 per kWh to over N66 per kWh.
With regards to petrol, the Buhari government has said it will no longer fix prices for petroleum products. It has decided to adopt a “laisser-faire” approach where prices will be determined by the market (supply and demand). They argue that this will ensure the steady supply of petrol and will prevent long lines at petrol stations as the COVID 19 pandemic has greatly reduced government revenue and its ability to subsidize petrol costs. To cushion the effect, the government explains that it will now focus heavily on the interest of consumers by making sure that marketers are not raising their prices to take advantage of the new situation.
If this is the solution from the government, one can tell in these early days that it is not having much of a positive impact on the Nigerian consumer. Nigerians have already started to feel the effect of the government’s actions in their daily lives as food and transportation costs have suddenly sky rocketed. In these most unusual times, it is not appropriate to adopt a laisser-faire/market approach when across the globe governments are doing the exact opposite to cushion the effects of the pandemic.
Nigerians have been pushed to the wall already by a pandemic that pretty much shut down the economy, most especially the informal economy which accounts for 90 percent of the country’s productivity. It makes one wonder whether any critical thought went into making this decision to hike petrol prices and electricity prices at the same time. As global supply chains suffer, this should be the time to ensure that we are at least able to produce enough locally for our population. This will be next to impossible if the current situation is not reversed.
In a country where people are pushed to the wall in this manner, the next level could be a state of insecurity or anarchy especially when people feel that they have nothing to lose. There has already been an outcry by specific groups of citizens. On the 4th of September 2020 in Osogbo for example, youth protesters lamented the rise in petrol and electricity tariffs. They have given the government a five-day ultimatum to reverse the prices as they threaten to have a long drawn out series of protests. Similarly, nongovernmental organizations such as Emergency and Risk Alert Initiative (ERAI) and Action Aid have opposed the hikes of these two commodities at the present time expressing the concern that these prices will push more people into poverty leading to conflict and deeper insecurity in the country.
The economic argument for market forces determining price of commodities can be made, and understandably so. It is however painful that the poor masses always have to bear the brunt of outcomes given a country where inefficient use of resources and corruption remain the core catalyst of our socio-economic challenges The government needs to retrace its steps and realize that this is not just an economic issue. It is a matter of social and national security. There must be a better and more sustainable way to deal with this matter.