In addition to acute shortage, the recent hike in petrol prices from about N700 a litre to about N900 has plunged Nigeria deeper into energy poverty that is characterised by unavailability, inaccessibility and unaffordability of Nigeria’s most utilized energy product. With an average daily utilization of between 40 million and 60 million litres, petrol is Nigeria’s most utilized energy product and is closely followed by diesel with about 14 million litres of daily utilization. While diesel is used to power large-scale enterprises and bulk logistics, petrol is used to power the small and medium-scale enterprises that constitute the largest chunk of Nigeria’s gross domestic production activities.
Ordinarily, Nigeria is supposed to be an ‘energy paradise’ where products like diesel and petrol are available, accessible and affordable because beneath its soil flows rich deposits of hydrocarbons. With a proven reserve of about 37 billion barrels of crude oil, Nigeria is ranked second in Africa and 10th in the world. Unfortunately, with many years of corruption and mismanagement of its hydrocarbon wealth and oil and gas infrastructure, Nigeria has not been able to convert its enormous crude oil reserves into energy security for its people. Unable to refine its domestic need of basic hydrocarbon energy derivatives such as petrol, diesel, jet kerosene, naphthalene, etc, the 10th oil producer in the world has to depend on importation of these essential products. With four dysfunctional refineries in Port Harcourt, Warri and Kaduna that appear to have defied all solutions at making them work, Nigeria is about the only member of the Organisation of Petroleum Exporting Countries (OPEC) that depends entirely on importation to meet its domestic requirements for petrol and diesel.
However, to shield Nigerians from the additional burden of the cost of imported products, the government imposed a subsidy regime on product pricing as a means of providing affordable energy to the people. But as the years passed and successive governments’ priorities increasingly shifting from public to self-service, the political leadership of Nigeria began to grumble over the ‘’burden’’ of subsidy and its ‘unsustainability.’ And they quickly found allies in an emergent class of neo-liberal free market fundamentalists and fanatical apostles of Washington Consensus economic orthodoxy who denounced subsidy on petrol as a vice while exhorting its removal as an economic virtue. Interestingly, after many years of purveying this single narrative unchallenged, the government and its free market fundamentalists allies managed to convince Nigerians to consent to mass economic suicide when they voted for presidential candidates who pledged to remove subsidy on petrol. One of them, Ahmed Bola Tinubu, emerged President and on his inauguration day declared subsidy “gone.” And Nigeria will never remain the same again.
The policy of petrol subsidy removal ushered Nigeria into an oil shock that plunged a major oil-producing country into its worse energy nightmare that it is yet to recover from. And the consequence has been an unprecedented cost of existence crisis arising from mass starvation of the Nigerian people whose wages have been diminished amid rising inflation. All the promises of the post-subsidy era by the apostles of Washington Consensus to the effect that competition will drive prices down just as more investments will flow into the oil and gas sector have not come to pass. Prices have continued to rise just as not appreciable levels of investments have been recorded. Similarly, the many promises of government that savings from subsidy removal will be channelled to improve education, health care, social investment and agriculture are yet to materialize. Apart from the occasional distribution of bags of rice to a few officials of the ruling party across the states, the only other visible utilization of savings from subsidy removal is the purchase of a new presidential jet for the use of President Tinubu and the first family.
By now it should have been clear to the leadership of Nigeria and its allies in the economic intelligence community that energy security is the foundation of a productive economy that can spur growth, development and citizen prosperity. And because of the fundamental role it plays in economic productivity, the price of energy cannot and should not be left to the dictates of market forces. The price of energy must be controlled by the state through the instrumentality of subsidies. And this is in line with best practices in energy security management, especially in the nations of the Global North. From the United States of America, the headquarters of capitalism and market fundamentalism, came the news of the Biden administration’s effort at energy price intervention. A White House press release on May 22 2024, titled “Biden to Release 1 Million Barrels of Gasoline to Reduce Prices at the Pump Ahead of July 4” stated, “With Memorial Day weekend and the start of the summer driving season around the corner, the Biden-Harris Administration is taking action to lower gas prices with the sale of one million barrels of gasoline from the Northeast Gasoline Supply Reserve. This builds on other actions by President Biden to lower gas and energy costs, including historic releases from the Strategic Petroleum Reserves and the largest ever investments in clean energy.” Clearly, the invisible hand that corrects the energy market in America is the not the forces of demand and supply but government whose responsibility it is to ensure energy security for its citizens.