(1) Lord Lugard handed over Lagos to Bola Tinubu to rule with splendour, YES or NO?. If you checked YES, you may have to return to primary school.
(2) Nigeria is going through a metamorphosis as the nation goes for full liberalization of the downstream petroleum sector by removing any price ceiling on petroleum products: “The Petroleum Products Pricing Regulatory Agency (PPPRA) has on Thursday, announced the removal of the price cap on petroleum products, giving marketers the right to fix prices and sell as they deem fit”.
The Petroleum Products Pricing Regulatory Agency (PPPRA) has on Thursday, announced the removal of the price cap on petroleum products, giving marketers the right to fix prices and sell as they deem fit.
The agency communicated the decision through a document signed by its Executive Secretary, Mr. Abdulkadir Saidu, which was titled: Market Based Pricing Regime for Premium Motor Spirit (PMS) Regulations, 2020.
The document stated that henceforth, the PMS pricing will be determined by market forces, but the agency will continue to monitor the oil market and offer the Nigerian National Petroleum Corporation (NNPC), and marketers, advice on monthly pricing..
This is a big deal and this could shape Buhari’s legacy. It is a very pivotal moment in his Presidency because if he follows through and makes this happen, Nigeria will economically evolve from multiple angles:
- Save money wasted through forex issued at non-market rates.
- Eliminate corruption associated with fuel subsidy.
- More money for the government since these players will pay taxes on improved revenues.
- Less borrowing since Nigeria will not need to borrow to make millionaires more crazy with subsidy scams.
Yet, Nigeria has to find a mechanism to help the poor. If the cost of transportation rises, due to high cost of fuel, a huge percentage of the poor will struggle. This is a very interesting moment as Covid-19 continues to change the world in more ways. But do not rejoice: this could be a poison pill as the price of crude oil continues to rise. But do not rejoice: this could be a poison pill as the price of crude oil continues to rise. Due to market imperfection in a highly heterogeneous market like Nigeria, with challenging infrastructures, we could have a situation where rural dwellers with limited supply (i.e. fewer fuel stations) may have to pay more, well ahead of those in places with many stations. Of course, using basic economics, one would expect more fuel stations to be built in those rural areas to shift the price equilibrium point. Nonetheless, in the interim, there could be pain for many people, especially those in rural communities, due to this market-driven pricing of petroleum products.
You know the implication? These cities and nations are advancing and will possibly formalize their largely informal economic systems. Most of these redesigns would not have happened without Covid-19 as some activists would have mounted ferocious challenges. But with the virus ravaging things, those counter-calls have been muted. Why? If you think collecting cash is the way to go, governments will ask you to go and mount the toll gates and be paid for doing that job.
Covid-19 is evil. Yet, it has provided opportunities for some economies to reform. I do hope Nigeria takes actions across our market sectors and territories. There are many positive things the government can do now with no opposition in the name of Covid-19. Call this moment a generational opportunity to bring reforms in markets and economic structures.