The Nigerian Association of Chambers of Commerce, Industries, Mines and Agriculture (NACCIMA) and the Lagos Chamber of Commerce and Industry (LCCI) have expressed worry over the recent increase of the ex-depot price of Premium Motor Spirit (PMS).
The Petroleum Products Marketing Company,(PPMC) had increased the ex-depot price of PMS to N155.17 per litre from N147.67 per litre.
NACCIMA and LCCI is calling on government to support the real sector and increase investment in mass transit systems while accelerating the power sector recovery programme.
The Director General of NACCIMA, Amb. Ayo Olukanni noted that when viewed in isolation, this increase could be considered as a move to ensure that prices of petroleum products reflect market realities. However, considering the rising unemployment (over 21million people unemployed as at Q2, 2020), rising food prices, (16.7% on a year-on-year basis, as at September), and an economy in decline (GDP growth rate of negative 6.1% as at Q2, 2020) further exacerbated by the closure of land borders and an increase in electricity tariffs; it is clear that an increase in pump prices of petrol (a major source of energy needs of the population) will increase the cost of production for the real sector.
He said in turn, the increased cost of production will be passed to the consumers who have seen their purchasing power eroded.
“There is an urgent need for some form of social safety net in the current situation.”
To stave off the looming economic recession, and accelerate economic recovery, the association counselled the federal government to accelerate the effective and prompt implementation of all stimulus packages and intervention funds designed to support the production processes of the real sector, while considering the implementation of measures to reduce energy costs.
The DG said the increase will serve only to increase the severity and duration of the looming economic recession.
On his part, the DG, LCCI, Dr. Muda Yusuf, emphasised the need to reduce the adverse impact of petrol price volatility on small businesses and the welfare of the citizens. This he said could be achieved by scaling up investment in mass transit systems and accelerating the power sector recovery programme to reduce the dependence of Micro, Small and Medium Enterprises (MSMEs) on petrol powered electricity generators.
In addition, the DG pointed out that the way out of the constant increase in petrol price is to accelerate the process of domestic refining of petroleum products.
“A deregulated pricing regime is typically volatile, oscillating with global oil price. The reality is that a reversal of the deregulation policy is not an option. The government does not have the fiscal capacity to sustain a subsidy regime.
He also called for a competitive market framework to enable the deregulation achieve positive impact, adding that quick approval of domestic refinery operations would boost access to petroleum products for economic development
The LCCI DG, however, blamed NNPC’s monopolistic supply structure for the inability of Nigerians and the economy to benefit from the positives of deregulation.
“We are still immersed in a monopolistic structure even as we claim to have deregulated the petroleum downstream sector.”
He emphasised that the government needs to urgently put appropriate structures in place to ensure a level playing field and for the deregulation regime to achieve its objectives, because private sector players were strapped for foreign exchange to import petroleum products, while the refineries remained comatose.
