by Dr. Peregrino Brimah
The abbreviated explanation of the new deregulated petrol prices is the decision by the Nigerian government to push Nigerians away from enjoying fuel imports with CBN dollars, analysts have said.
The abbreviated explanation of the new deregulated petrol prices is the decision by the Nigerian government to push Nigerians away from enjoying fuel imports with CBN dollars, analysts have said.
More than just remove the fuel subsidy, which it already did, the government is also being miserly with 'its' dollar reserves – for the masses that is – and forcing the citizenry to buy product imported based on black/parallel market forex prices.
In the statement released by the Nigerian government on the 'deregulation' of the fuel downstream, the decision by the 'Honorable' minister of Petroleum is captured thus. I quote:
"2. All Oil Marketers will be allowed to import PMS on the basis of FOREX procured from secondary sources and accordingly PPPRA template will reflect this in the pricing of the product."
The 'Subsidy' Removed: CBN 'Subsidized' Dollar
Secondary sources of forex is the blackmarket. The ongoing fuel shortage can now be better understood. The answer to "how hard can it be to properly estimate and import the fuel needs of a nation?", is answered: it depends on how much CBN dollars the government is willing to spare. Kachikwu and Emefiele were unwilling to use CBN dollars to import refined product and that is why we had long lines at the pump.
The Federal government of Nigeria is unwilling to continue to use its dollars to import fuel for Nigerians.
The CBN dollar rate is N197/USD while the blackmarket rate hovers around N325/USD.
The subsidy on fuel was removed since December. Our memory span is not that short. [See: Nigeria scraps fuel subsidy, cuts petrol price to N85 per liter- PremiumTimes, December 26th, 2015]
What was just removed was the CBN dollar rate 'subsidy' if I can e pardoned for using that term. Nothing changed between December and now. Global oil prices have barely increased. There is no other denominator to factor for this 50% hike is there?
The change in price per liter can be calculated with basic level maths simply thus:
At CBN N197 the price without subsidy was N85.60
At Blackmarket N325 what will the price be?
325 x 85.60 / 197 = N141.00
This is how Kachikwu and co came up with the new N145/liter rate.
CBN Dollar: You Now Get None While The Cabal Happily Get All
What bothers is the same Federal government has in public statements, promised to continue to allow unfettered access to CBN dollars for Nigeria's cabal, the likes of Aliko Dangote and others.
“Your ongoing 14 billion dollar refinery investment will enjoy our support, no doubt. We are doing this to fast-track the importation of equipment you need for a speedy completion of that project and to encourage other Nigerians to follow your lead," CBN Governor Godwin Emefiele said during a tour of Dangote's $14 billion refinery project in January this year.
Nigeria imported 6 billion litters of fuel in 2015. The cost in CBN dollars to import this amount of fuel is less than $3 billion/annum.
But unfortunately, rather that use some of the forex revenue generated from the sale of oil to import fuel for the masses, the government will happily invest that forex in Dangote's private refinery and other businesses of the affluent and force the masses to buy fuel at the convenience of hawk private cabal and the banks that have now become the official blackmarket.
If after this hike, the NNPC still imports more than half of PMS, we should expect half the stations in Nigeria to sell petrol at less than N100/liter. But don't hold your breath for that. I doubt Godwin and Kachikwu will allow you the advantage of product for your CBN forex's worth. As Nigeria goes, if they do, they will either exploit you at the N145 rate or sell through their friends' distribution channels who will sell it at the rate of BDC imports, N145 at the pump...or more. The cabal has won.
The question one of our analysts raised was: so in what way do the common Nigerians benefit from the sale of oil?
My friend just called me today complaining bitterly and asking me to do something. She said I should write about the CBN forex policy and its lack of regulation on banks/permitting them to operate as black-marketers. She complained that the bank approved her BTA for school for $4000. But when she went to the bank today ahead of her journey, the bank only gave her $2000. {Not that she couldn't afford it as the President said, but she couldn't 'afford' the access as he actually meant} Obviously they will sell the remaining $2000 at $3000 in their Godwin-legalized blackmarket...or it will be used to import PMS. I told her I have written and spoken about it, the government is deaf; the next level we are on is to take the government to court.
The failure of the government to devalue the Naira has raised criticism from many quarters. This failure is said to help increase the gap between the rich and poor while promoting corruption. Now PMS is the latest avenue for dollar round-tripping forex by the legalized blackmarket banks
The wealthy cabal have access to CBN dollars for their big businesses while small businesses are collapsing in Nigeria at a rapid rate. Small businesses are however, paradoxically the largest employers of labor. Small businesses account for over 70% of employment. But the big businessmen are the friends and sponsors of politicians and they get all their ear and all advantages including CBN dollars and duty free import waivers.
Finally the last benefit from CBN dollars to the masses has been pulled and more doors opened widening bank dollar hustle corruption with the hike in fuel prices to enable and allow cabal independent importers round trip dollars via PMS import and make a killing by selling the fuel at the new blackmarket forex standardized rate.
This newest deprivation comes on the back of the new Works minister's "ultra-wicked" as the Senate called it, electricity tariff hike for no electricity, and his thirsty promise to impose road tariffs/tolls too.
But the good news is, I am convinced that the day the masses have nothing left to eat but the rich, has not yet come because Nigerians are extremely patient and gullible.... and then, it's Buhari.
Dr. Peregrino Brimah
@EveryNigerian
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