The recent announcement of the increase in the price of petrol in Nigeria by the Nigerian National Petroleum Company Limited (NNPCL) has elicited strong reactions from the Lagos Chamber of Commerce and Industry (LCCI). The move raises concerns about its implications on the business environment and the economy in general.
The LCCI has highlighted the adverse effects of the increase on business operations, thereby highlighting the challenges facing the private sector. While the hike may be part of a broader strategy aimed at the full liberalization of the oil sector and the removal of fuel subsidies, it brings with it a host of uncertainties and controversies that are seriously disrupting the business landscape.
In a statement signed by its President, Mr. Gabriel Idahosa, the LCCI expressed concerns over the lack of clarity in policies issued by the Ministry of Petroleum Resources, the NNPCL and other oil sector regulators. Uncertainties surrounding the relationship between NNPCL and Dangote Refinery were also highlighted, underscoring the importance of increased transparency.
Businesses are already facing increasing challenges, including rising operational costs due to logistics, power supply, scarcity of foreign exchange and exorbitant third-party service charges. The exponential growth in petrol prices since the inception of President Bola Ahmed Tinubu’s administration has had a significant impact on businesses and consumers, straining their financial capacity.
To address these challenges, LCCI calls for a comprehensive approach that takes into account social, political and economic factors. It encourages the government to clarify the fuel subsidy situation and provide greater transparency on local consumption levels. LCCI also advocates a fierce fight against illegal oil production and oil theft to prevent the clandestine export of Nigerian oil to neighbouring countries.
Furthermore, LCCI recommends effective implementation of the Petroleum Industry Act (PIA) to fully liberalize the oil and gas sector, reduce uncertainties, ensure sanctity of contracts and attract foreign investment. Savings generated from the removal of subsidies could be reinvested in infrastructure development to mitigate the economic impact.
Furthermore, LCCI suggests that the price of crude oil supplied to refineries should be pegged in Naira at an exchange rate of N1,000 to the dollar. This would reduce logistics and transportation costs, stimulate economic activity and alleviate financial hardships faced by the population.. A reduction in transport costs would also have a significant impact on food inflation, given that transport is a major cost item for the production and delivery of food.
In conclusion, the LCCI calls on the government to communicate more clearly on policy directions in order to restore a degree of certainty that is essential for business planning and decision-making. Only a holistic approach that takes into account the needs of all stakeholders can create an environment conducive to economic growth and stability.