Before you come after me with accusations of wanting to remove the only benefit of the poor man from the all-too-evasive national cake, let us think through this proposal together.
Next, after moaning for a couple of weeks (and a possible NLC strike), Nigerians would start to curb their fuel usage. Couples with 2 cars would share 1 (and spend more time with each other). People going for social functions would car pool. Less cars on the roads, less traffic, etc. People would stop running their generators for 24 hours and instead use it at night only (like my neighbours now do). More people would explore alternative sources of electricity like inverters. I'm sure my Igbo brethren will start to import single-battery inverters, the inverter equavelent of "I pass my neighbour" generators, as there will be a market for that.
But it won't stop there. The reduced fuel consumption will lead to reduced sales and revenue for the oil marketing companies. And simple economics will take over. Reduced demand will lead to reduction in prices. Considering we do not have have a monopoly in the downstream oil sector, oil marketing companies will start trying to outdo each other. That's the beauty of competition and capitalism. Just like in the telecoms industry (remember when SIM cards were sold for N30,000), you will start to see sales promotions, Total selling cheaper than MRS, OandO selling cheaper than Total, Fort Oil running loyalty schemes, etc.
On the other hand, the government revenue freed up from the subsidy removal can be used to drive other projects. For example, we can finally repair our refineries, or better still, we can ensure that every Nigerian household is given a free pre-paid meter. This would prompt the new PHCN owners to sit up and ensure power supply as they will not be able to rely on estimated bills for income when they have not supplied power to neighborhoods for months. The improved power supply will further lead to reduced fuel consumption (since over 50% of petrol purchases is used to fuel generators), further encouraging the filling stations to reduce prices. Welcome to the world of the telecoms companies. Finally, the poor man has his cake back.
What would happen if GMB'S first act upon being sworn-in is to deregulate the petroleum sector and remove the fuel subsidy?
First of all, the oil marketers and filling stations would be free to openly sell fuel at the ridiculous prices that they currently sell in secret. There would be no need for the black market as you can drive into the nearest filling station and buy fuel at whatever exorbitant price they choose to sell it. But you would be buying from the pump, not paying some roadside tout to fill your tank with something you hope is petrol at the same exorbitant price.Next, after moaning for a couple of weeks (and a possible NLC strike), Nigerians would start to curb their fuel usage. Couples with 2 cars would share 1 (and spend more time with each other). People going for social functions would car pool. Less cars on the roads, less traffic, etc. People would stop running their generators for 24 hours and instead use it at night only (like my neighbours now do). More people would explore alternative sources of electricity like inverters. I'm sure my Igbo brethren will start to import single-battery inverters, the inverter equavelent of "I pass my neighbour" generators, as there will be a market for that.
But it won't stop there. The reduced fuel consumption will lead to reduced sales and revenue for the oil marketing companies. And simple economics will take over. Reduced demand will lead to reduction in prices. Considering we do not have have a monopoly in the downstream oil sector, oil marketing companies will start trying to outdo each other. That's the beauty of competition and capitalism. Just like in the telecoms industry (remember when SIM cards were sold for N30,000), you will start to see sales promotions, Total selling cheaper than MRS, OandO selling cheaper than Total, Fort Oil running loyalty schemes, etc.
On the other hand, the government revenue freed up from the subsidy removal can be used to drive other projects. For example, we can finally repair our refineries, or better still, we can ensure that every Nigerian household is given a free pre-paid meter. This would prompt the new PHCN owners to sit up and ensure power supply as they will not be able to rely on estimated bills for income when they have not supplied power to neighborhoods for months. The improved power supply will further lead to reduced fuel consumption (since over 50% of petrol purchases is used to fuel generators), further encouraging the filling stations to reduce prices. Welcome to the world of the telecoms companies. Finally, the poor man has his cake back.
This may sound utopian and naive but it's a bullet that has to be bitten at some point and what better time than now. Nigerians are already paying through their noses for the scarce fuel and reducing their fuel consumption as a result. Also, taking this step early affords us enough time to see the results and decide if we want to vote GMB for another term in 2019.
Comments
Post a Comment