Nigeria’s state-owned oil company NNPC has assured consumers that it will not increase the price of petrol despite the recent devaluation of the local currency, the naira. The naira plunged to as low as 1,531 per dollar from 900 last week, after the market regulator changed its closing rate calculation method, in a move seen as a de facto devaluation.
The naira’s weakness has raised concerns that NNPC, which is the sole importer of petrol in the country, may hike the pump price to recover some of its import costs. However, NNPC said in a statement that it has no plans to review the price upward and urged Nigerians to disregard the speculation.
Petrol Subsidy Scrapped
The NNPC’s statement comes amid a public outcry over the removal of a popular but costly fuel subsidy by President Bola Tinubu last July. The subsidy kept petrol prices low but cost the government $10 billion in 2022. Tinubu scrapped the subsidy and lifted restrictions on currency trading, which more than tripled petrol prices, as part of his economic reforms to revive sluggish growth.
The reforms, however, pushed inflation to a nearly three-decade high in December, worsening a cost of living crisis for millions of Nigerians. Tinubu has been under pressure from unions to offer relief to households and small businesses affected by the subsidy removal and the currency devaluation. He has said he is aware of the hardship and is monitoring the effects of the exchange rate and inflation on petrol prices, adding that he will intervene if and when necessary.
Unions Threaten Strike
Nigeria’s main unions on Thursday gave a two-week ultimatum to the government to meet their demands, which include a wage increase, improved access to public utilities, and a reversal of the petrol price hike. The unions said they regretted the government’s failure to uphold its pledges to cushion the effects of the reforms and warned of a nationwide strike if their demands are not met.
Nigeria, Africa’s largest economy and oil producer, has been hit hard by the slump in global crude prices and the coronavirus pandemic, which have reduced its revenues and foreign exchange earnings. The country entered its second recession in four years in 2023 and is struggling to recover from a 1.8% contraction in its gross domestic product.
Despite the challenges, some analysts say that Nigeria’s reforms are necessary and beneficial in the long run, as they will help the country diversify its economy, reduce its dependence on oil, and attract more foreign investment. They also say that the removal of the fuel subsidy will free up funds for the government to invest in infrastructure, health, education, and social welfare.
Moreover, some experts say that Nigeria has the potential to leverage its abundant natural resources, such as gas, solar, and wind, to develop a sustainable and clean-energy future. They point to the recent launch of the Nigeria Renewable Energy Master Plan, which aims to increase the share of renewable energy in the country’s energy mix from 13% to 36% by 2030. They say that such initiatives will not only reduce Nigeria’s carbon footprint, but also create jobs, improve living standards, and enhance energy security for millions of Nigerians.
Source: Reuters
