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By Lawrence Agbo
Senior economist Paul Alaje of SPM Professionals has called on the Federal Government to implement a petrol subsidy in collaboration with the Dangote Petroleum Refinery to shield Nigerians from soaring fuel prices caused by the ongoing Middle East conflict.
Speaking on Channels Television’s Morning Brief, Alaje noted that before the escalation of the Iran–US war, the refinery had reduced petrol prices to ₦800 per litre.
“Before the war, Dangote Refinery had slashed prices to ₦800 per barrel. Now that prices are soaring, what that means is that the costs of living will keep soaring, and food prices will escalate.
“We have seen governors such as Seyi Makinde announcing some sort of ₦10,000 support. It’s something, even though relatively small. We encourage other states to do the same.
“What we should do is partner with Dangote. What was the cost of crude to Dangote before the war? Can we maintain that price as a petrol subsidy to Nigerians? And then instruct that for everybody who is buying from Dangote, there should be a specific price at which the products should be sold.
“We can now deliberately reduce oil theft, which is a gap nobody wants to talk about. Can we deliberately stop oil theft, even if it is just for this period that everybody is going through hardship? Then take all of those crude and give them to Dangote for refining so that prices can go back to what they were before the war?”
He warned that continued disruptions in the global oil market could push prices above ₦1,500 per litre, with diesel potentially reaching ₦2,000.
Alaje suggested that the government should maintain pre-war crude costs for refining, while ensuring regulated retail prices for consumers. He also highlighted the need to reduce oil theft and channel crude to the refinery to stabilize prices.
“What we know now is that America has said it is making efforts to talk with Iran on how to end the war.
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“But whether that will be the case is another kettle of fish. The war is still ongoing, and the price of Brent crude is climbing to about $110 per barrel.
“If it gets to $120, one of the implications is that Nigerians will be buying PMS above $1,500 per barrel, approximately N1,600. That also has an implication that will double the cost of transportation before the pre-war.
“So, do I think the war will stop soon? I hope it stopped yesterday. But with the activities I see around the Middle East, I doubt. President Trump has even said that they don’t even know who they are talking to.
“This war has major implications for gas supply. Just yesterday, we saw what we can call a notable delay of flights from Nnamdi Azikiwe Airport to other airports. It blamed the delay on operational reasons, but data aggregation noted that Jet-A1 rationing may be one of the reasons for the delay.
“So the war is already affecting everyone. But if the war prolongs and the US targets the Iranian oil, Nigerians should be ready to pay more for diesel. It will grow more from what it is now to about N2,000 per litre.
“That means you will pay more for production, pay more for finished goods, and the one we are importing will get hit by global inflation”, he said.
He emphasized that rising fuel costs would have a domino effect on transportation, food prices, and overall cost of living, warning that the National Bureau of Statistics’ February inflation rate could climb to around 16 percent.
“Already, we should expect the war to have an impact on the inflation rate for February, which we should expect to be about 16 per cent above what was reported in January, slightly above 15 per cent, and prices of commodities have started going up”, he said, adding that the government needs to introduce more economic reforms.
In addition to subsidies, Alaje called for broad economic reforms in energy, agriculture, industrial output, and transport infrastructure to mitigate the impact of global oil shocks on ordinary Nigerians.
