Lagos — Different viewpoints met head on Friday as Nigeria's Senate began public hearings on the planned deregulation of petroleum products pricing.
"It is a mental person that will suggest an increase in the price of petroleum products in Nigeria," said Babs Conley, who described himself as the President of a group called Concerned Citizens of Lagos State. Conley said Nigerians were yet to recover from the effects of previous increases in the prices of these products, which he said had 'caused a lot of hardship on the people."
The last military government of Nigeria, Conley recalled, increased the price of petrol from nine naira to 22 naira per litre in 1998. President Olusegun Obasanjo's government followed up with a 10 percent increase last June, which raised the price of petrol to 22 per litre.
"Prices of commodities have shot up, land lords have raised their rents, and even transporters have raised their fares," he told the Senate Committee on Petroleum at the sitting here.
Government says the current price is too low, and must be raised to remove a subsidy of 200 billion naira (about $2 billion) annually, and also encourage private investment into products refining in the country. It says the increase will also eliminate smuggling of the products across Nigeria's border to neighboring countries.
Babajide Soyode, a chemical engineer and former employee of the Nigerian National Petroleum Corporation supported this view. Soyode told the Committee that the time to deregulate the downstream sector of the oil industry had come. "Deregulate, if possible, tomorrow," he said.
Against an international market price of $27 per barrel of crude oil, the government sells a barrel of crude to NNPC at $9.50, for refining for local consumption. This gives a subsidy of $18.50 per barrel. Soyode said this is wrong. "Government should sell crude oil to anyone that wants at an international market price," he said.
Savings from the subsidy withdrawal, he said, should be invested into education, mass transit, and others. "Subsidy is like a gun. If you aim it properly, goes to the right people you want to subsidise."
Soyode also argued that deregulation would create a market environment that will make it easy for the government to sell the countries refineries, as planed under its privatisation programme. Without deregulation, he said, it would be difficult for investors to place appropriate values on the refineries.
"Without deregulation there is no market. It is only deregulation that can set the value of the refineries," he said, adding: "I will not advise the government to sell the refineries before deregulation."
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However, Gbenga Aluka, a Senator and member of the committee, said anyone who advised the government to increase the prices of these products, wanted it to commit a "political suicide." In a country without any safety net (such as social security), he said, "the safety net we can give is to make the resources that we have cheap for our people," he said.
There is nothing criminal in giving to your people what you have, he said, "because the resource is a commonwealth.
Senator David Brigidi, Chairman of the Committee, pointed out that Aluko's views were personal, and did not represent those of the committee. Brigidi had said at the start of the sitting that the public hearing was not "a talk-shop." The purpose, he said, was to generate inputs into a legal framework that would guide the proposed deregulation of the downstream sector of the oil industry.
The public sitting will hold in five more cities, and also includes a visit by the committee to the Warri Refinery.
