1 month ago
11 ARTICLE AD
Energy has become unaffordable to average Nigerians who now seek other unhealthy means to cope with life exigencies, even as the government insists on subsidy removal, writes DARE OLAWIN
Since President Bola Tinubu’s administration came on board in May 2023, the cost of energy has been on the rise, leaving many vulnerable Nigerians in energy poverty.
During his inauguration, the first assignment performed by the president was the removal of the petrol subsidy, which saw the fuel price skyrocketing from barely N200 to about N600. The president appeared to have forgotten his promise during his campaign in Abeokuta, the Ogun State capital, that he would bring down the cost of petrol, even if his predecessor took it to N500/litre.
Tinubu’s subsidy removal was followed by the devaluation of the Nigeria by the Federal Government. The floating of the naira brought about more hardships, especially as the dollar rate affected the cost of imported petroleum products and other goods.
To reduce the hardship, the Federal Government directed the Nigerian National Petroleum Company Limited to sell petrol to the masses at half the landing cost. This means the NNPC was selling a litre of premium motor spirit at N600 having imported it at N1,200/litre.
Recently, the NNPC, which has for months denied subsidy payment, lamented over mounting debts. The company said it could no longer continue to sell below the cost price. Therefore, clandestinely hiked the price of petrol from N600 to rates around 855 and N1,000, depending on the location.
Even with the Dangote refinery, the price of PMS stood above N1,000/litre in some locations, especially in filling stations owned by independent marketers.
Unexpectedly, the price of petrol rose amid the harsh economic situation. The government said it has fully deregulated the sector and would no longer fix the price. The market forces, it was said, would now determine the price.
Aside from the high rate of fuel, Nigerians have continued to experience serious petrol scarcity. In 2024 alone, the country experienced almost 90 days of fuel queues in filling stations. During the Easter period and in early May, commercial activities were almost grounded due to fuel shortages. Something similar nearly occurred in June, but it did not last. From July to September, Nigerians faced excruciating pains searching for petrol and resorted to buying at a premium from black marketers.
With petrol at over N1,000 a litre, the cost of transportation has gone higher, with a ripple effect on the items in the market. Nigerians who could not do without going to fend for themselves now spend more of their earnings on transportation.
To reduce the effect of this on their finances, individuals are devising different means. Some have resorted to trekking a long distance to reduce the cost of transportation. Instead of going to motor parks, many now stand by the road to look for cheaper vehicles.
During this period, some private car owners have turned to commercial drivers in an attempt to recoup some percentage of the amount spent on fuel daily. When going out, they carry passengers along the road. This they said reduces the effect of the price hike.
“This is the only way to recover a little of what we spend on fuel. I carry passengers when going to work and when returning home,” a civil servant told transport union officials as he stopped to pick up passengers at Seven-Up bus stop in Lagos.
It was learnt that some car owners have parked their vehicles to embrace public transportation for they could not cope with the new fuel prices.
A veteran journalist, Richard Akinola, said jokingly that owners of V8 SUVs who are not in government are in the hands of God with the current fuel price.
In Pidgin English, Akinola joked about how he ignored his SUV for a smaller car due to the new fuel reality.
“As l wan comot this morning, l look my V8 SUV, he too dey look me. I look am again, he come cut eye for me, telling me to come. Naim l tell am ‘waka, ya fada.’ Na so l enter my Camry jeje,” he posted on his Facebook page. It translates to “As I wanted to leave home this morning, I looked at my V8 SUV, it looked at me too. I looked at it again and he blinked an eye, telling me to come. But I told the car, ‘walk, your father.’ That’s how I entered my Camry quietly.”
Kolapo Oduola, replied, “I have joined the group of Keke (tricycle) riders, my brother, though no plan to sell the car.”
To reduce the hardship, some states like Lagos and Ogun have told their civil servants to work from home for some days of the week. But self-employed people have yet to find a way out. Traders and artisans who cannot do without petrol for their businesses are counting their losses; the cost of production has risen and customers are not ready to pay more, especially for services.
In August, one of the requests of the #endbadgovernance protesters was the return of fuel subsidy. They were of the belief that the rising cost of food and other items would reduce if petrol is cheaper.
But the President refused. Tinubu said the subsidy was removed to save the economy. The Minister of State for Petroleum (Oil), Heineken Lokpobiri, also called for total subsidy removal to stop the smuggling of PMS. Recently, the President of the Dangote Group, Aliko Dangote, also advocated the total removal of subsidy. But the masses differ; they said this would spell doom for the economy.
Former Director-General of Peter Obi’s Presidential Campaign Organization, Doyin Okupe, disagreed with Dangote’s suggestion that the government should fully eliminate fuel subsidies.
According to Okupe, governments across the world recognise key sectors that are essential to their citizens’ well-being, such as transportation, housing, and health in Britain, and agriculture in the USA. These countries, he noted, maintain unwavering support for these sectors, regardless of political changes or economic pressures, even during times of war.
Okupe suggested that with the Dangote Refinery and others like Port Harcourt Refinery coming on stream, Nigeria was now in a favourable position to manage its fuel resources more effectively. He advocated for the government to sell its 450,000 barrels per day crude allocation to local refineries at a significantly discounted price. This, Okupe argued, would lead to a sharp reduction in fuel prices, bringing much-needed relief to the Nigerian populace without affecting the national budget.
“With utmost respect, I disagree with Aliko Dangote on his suggestion that the government should completely end subsidy now.
“Petrol is the economic oxygen of Nigerians, whether rich or poor. This is not the situation in other countries of the world.
“Hence, we cannot benchmark the disposition of our government with other governments of the world. Governments all over the world identify what is the critical life-sustaining intervention required for the existence and well-being of their citizens and they remain committed to it.
“For Britain, these sectors are transportation, housing and health. For the United States, it is mainly agriculture. These countries do not shift grounds on these critical sectors, no matter, which political party is in power, or whatever the prevailing economic condition is, even in War!” Okupe maintained.
A few months after Tinubu assumed office, the price of diesel rose to N1,700 until Dangote refinery started production in March and crashed the price to around N1,000. This also affected the cost of aviation fuel.
With the sudden rise in the value of the dollar against the naira, the price of diesel also surged, mounting more financial pressure on businesses, especially at a time when public supply is at a low ebb.
As businesses depend majorly on diesel to run their plants and trucks, the amount being expended on energy went above the roof, overbloating the cost of production which eventually has an effect on the prices of goods and services. It could be recalled that diesel, which sold below N400 in 2021, has also brought about a huge increase in the cost of transportation, affecting the transportation of finished goods, farm produce, petroleum products, and others from one location to the other.
The President of the Manufacturers Association of Nigeria, Francis Meshioye, told The PUNCH that the cost of diesel has been affecting businesses being about 40 per cent of the production cost.
Today, a litre of kerosene is around N1,700. It is not certain that the government is still aware that many homes still depend on kerosene for cooking and hurricane lamps. In villages where people do not have access to electricity, kerosene was always the saving grace, but now the price has risen above the capacity of the masses. The resultant effect: the trees suffer.
A few years ago, the government persuaded Nigerians to adopt clean cooking through the use of liquefied petroleum gas. Many households switched to cooking gas. That was a time when a kilogramme of LPG was around N300 and cylinders were as cheap as possible. However, the 1kg of cooking gas now goes for as high as N1,500 or more, depending on the location. And the trees keep falling to serve as firewood.
In the power sector, the Nigerian Electricity Regulatory Commission, in its supplementary Multi-Year Tariff Order for April, raised the tariff in Band A to N225 per kilowatt-hour from N68. The tariff was later reduced to N209.50/kWh.
Our correspondent gathered that Nigerians in Band A now get 4.8 units for N1,000 instead of 14 units before the tariff hike. With N30,000, an electricity consumer would get 145 units instead of over 400 units before the subsidy was removed.
As the cost of electricity tripled, Nigerians want to opt for solar, but only the well-to-do can afford it. By adopting solar power, individuals and businesses can reduce their dependence on the national grid, and take steps towards energy independence.
However, concerns about affordability remain a major obstacle, preventing many from accessing this environmentally friendly option.
The PUNCH observes that with the rising cost of all energy sources, Nigerians are finding it difficult to free themselves from energy poverty as affordability and availability remain a big challenge.
According to the World Bank, about 85 million Nigerians lack access to electricity.
The World Bank Managing Director of Operations, Anna Bjerde, said, “In Nigeria alone, over 85 million people — more than 4 out of 10 Nigerians — are deprived of electricity.”
Bjerde disclosed that her trip to Abuja earlier this year reinforced what she already knew: the paradox of energy poverty in a land of plenty.
“Nigeria, an economic powerhouse with huge solar potential, has the largest electricity access deficit in the world. A shocking reality for a country beaming with energy,” she alarmed.
According to her, even those connected to the grid face frequent power outages, at a huge cost to society and the economy.
“Without the lifeblood of electricity, entire communities struggle to preserve crops, irrigate their fields, engage in economic activities, run health clinics, or allow children to study or play in decent and safe conditions. All of this creates a ripple effect that threatens the very foundation of healthy, prosperous, and resilient societies,” the World Bank official posited.
Meanwhile, the Federal Government has repeatedly assured Nigerians that its removal of subsidies would have positive effects on the economy.
The Federal Government said the introduction of compressed natural gas would lessen the burden and bring down the cost of transportation by about 40 per cent. However, it is not sure when this will be fully realised in all the nooks and crannies of the country.
In his Independence Day broadcast, Tinubu begged for patience, saying, “Fellow Nigerians, better days are ahead of us. The challenges of the moment must always make us believe in ourselves. We are Nigerians—resilient and tenacious. We always prevail and rise above our circumstances.
“I urge you to believe in our nation’s promise. The road ahead may be challenging, but we will forge a path toward a brighter future with your support.”
Tinubu ignores campaign promise
During his campaign, President Tinubu said he would bring down the cost of PMS, but the president did the reverse the moment he was sworn into office on May 29, 2023.
Immediately after the announcement was made, the country’s economic situation changed for the worse. Filling stations, including the ones owned by the Nigerian National Petroleum Company Limited, raised the pump price of PMS to above N500 per litre.
It could be recalled that Tinubu hiked the petrol price, forgetting he once promised in Abeokuta during his campaign that he would bring down the price of petrol. The then-candidate of the All Progressives Congress appeared to have backtracked from his decision when he promised to bring down fuel prices when he was in Abeokuta.
Addressing his supporters in the Yoruba language, “They said there would be a fuel price hike; that it will rise to N200, to N500. Put your mind at rest; we will bring it down”. This statement from Tinubu elicited jubilations from the crowd who saw the Lagos politician as a messiah. However, the reverse has been the case. Today, the same fuel has risen from N175 to over N1,000 per litre.
Masses reject Band A
Recently, some residents of Ota, Ogun State besieged the main office of the Ibadan Electricity Distribution Company along Idiroko Road, Iyana Iyesi to demand an immediate reversal of their tariff from Band A to Band B. The IBEDC customers said the new tariff had mostly affected Oju-Ore and Ilogbo axis of the area.
Bearing placards with various inscriptions, the protesters under the auspices of the Balance Measure Impact Initiative, condemned the IBEDC for moving low-income households in the area to the Band A feeder.
Speaking on behalf of the group, a resident, Lukman Odewole said, “Return us to Band B and do something quickly about the huge estimated bills you have given consumers in our area. Our people cannot continue like this. Most of us are retirees. Your staff are issuing N94,000, N95,000 estimated bills to a residential area.”
One of the coordinators, Mr Francis Adeoti, wondered why residential houses would be in the same band with companies like Coca-Cola and C-Way in the area.
The cry of this set of people was similar to many others in Lagos, Abuja, Benin and other parts of the country. Today, hospitals and universities are running into huge debts due to their Band A status.
But the Business Branch Manager, IBEDC, Ota Hub, Mr Yemi Eluwole, told the group that the idea of Band A is not that of the electricity company alone but of other stakeholders like the Federal Government and the Nigerian Electricity Regulatory Commission.
“It is not our intention as a business hub to move you to Band A and this is not limited to Ado-Odo/Ota Local Government Area but the entire country,” he said.
Eluwole explained that the idea arose from the desire to sustain the ongoing improvement in power supply amid the present high cost of providing a kWh of electricity. He said to achieve a stable supply, the government had made massive investments in electricity.
Speaking in Lagos on Wednesday, the Minister of Power, Adebayo Adelabu, stated that the Band A tariff was still cheaper than generating own electricity from petrol or diesel, which have risen above N1,600 per litre. The minister also said investors in the sector are making losses on the tariffs being paid by Band B to Band E customers. This created fears that the other Bands might soon have their subsidies removed.
Lawmakers raise concerns
Meanwhile, The House of Representatives on Wednesday cautioned that the recent hike in fuel pump prices could trigger social unrest. The Green Chamber handed down the warning as a meeting between the Federal Government and labour leaders over the increase in petrol prices ended in a stalemate on Wednesday.
The House called on the Federal Government to immediately reverse the hike in the price of petrol and cooking gas, given the current economic hardship across the country.
The resolution of the House praying for the intervention of the executive arm of government followed the adoption of a motion of urgent public importance moved on the floor of the Green Chamber by the Minority Leader, Kingsley Chinda, and 100 others.
Titled, ‘Urgent need to suspend the increased cost of petrol and cooking gas in the country and provide a stop-gap,’ the motion drew attention to the hardship Nigerians were facing in meeting their basic needs in the past few months.
Speaking on the essence of the motion, Chinda, a member of the Peoples Democratic Party, expressed concern over the prices of petrol and cooking gas, saying the development was creating an unsustainable financial burden on ordinary Nigerians and exacerbating the cost of living.
He said, “The removal of fuel subsidy coupled with global oil price volatility and the naira depreciation has contributed significantly to the rising cost of petrol at the pump and cooking gas for households.
“We are worried that the escalating fuel and gas prices are impacting the cost of transportation, food, essential goods and healthcare, further increasing inflation and pushing many families into deeper financial hardship.
“The House is concerned that businesses, particularly small and medium-sized enterprises, are struggling to manage their operational costs due to increased fuel prices, threatening economic stability and job security.”
Contributing to the debate, House Minority Whip, Ali Isa, condemned the incessant increment in the price of petroleum products, saying, “The people are suffering because of the increase in fuel price. The government should allow the people to breathe and should please not remove the cylinder giving Nigerians little oxygen.
In conclusion, the rising costs of fuel and electricity in Nigeria have plunged millions into energy poverty, exacerbating the struggles of an already vulnerable population. President Tinubu’s removal of the petrol subsidy, coupled with the devaluation of the naira, has led to skyrocketing prices, leaving many Nigerians scrambling for alternatives to cope with the burden. Despite assurances from the government that these measures will ultimately benefit the economy, the immediate reality is one of hardship, with citizens resorting to makeshift solutions to manage their daily lives. The calls for a reevaluation of the subsidy removal echo the sentiments of those who believe that affordable energy is vital for the nation’s well-being. As the government navigates this critical juncture, it must prioritise the welfare of its citizens and explore sustainable solutions to restore hope and resilience among the populace. The path to a brighter future hinges not just on policy promises, but on tangible actions that address the pressing needs of Nigerians struggling to keep the lights on. Energy availability is as crucial as energy affordability.
