Professor Adeola Adenikinju who is the President of the Nigeria Economic Society (NES), has expressed concerns over the current state of fuel production in Nigeria. Despite the inauguration of the Dangote Refinery, he noted that the anticipated decrease in the price of Premium Motor Spirit (PMS) has not materialized.
He remarked that the expectations surrounding local fuel production have not been met, leaving many Nigerians uncomfortable with the situation, be Vanguard reported.
When asked about the impact of the Dangote Refinery’s operations on fuel prices, Prof. Adenikinju stated, “I share the views of a free market economy, privatization, and such reforms. The whole idea is that when you have reforms or privatize, you are replacing government inefficiency with private sector efficiency. Unfortunately, what we are seeing and reading about what transpires between the NNPC and the Dangote Refinery has not really given us comfort.”
He pointed out that ideally, local production should result in savings of about 10 to 15% off the formal price due to reduced costs associated with shipping, insurance, and other taxes. However, he lamented that “unfortunately, what we are hearing is that we should not expect any change in prices. So, definitely there is total lack of transparency, and you can’t manage reforms if you are not going to be transparent.” Adenikinju emphasized that the Nigerian National Petroleum Company Limited (NNPC) must lead the charge for transparency in this process, stating, “There is no need to hide anything.”
The professor raised concerns about the current monopoly on PMS procurement by the NNPC. He argued that if the government has genuinely removed subsidies, the market should be liberalized. “If it is true that subsidy has been removed, then the market should be liberalized. Everybody should be free to either go to Dangote to buy or to import so that there will be competition.” This, he believes, would foster a more competitive environment that could benefit consumers.
Prof. Adenikinju also discussed the relationship between local production and the foreign exchange market. He explained that petroleum product imports have historically represented a significant portion of Nigeria’s foreign exchange demand. He noted, “Before now, we were told that petroleum products importation was responsible for about 30 percent of total foreign exchange demand.” He anticipates that with the Dangote Refinery operational, this demand could reduce, thereby positively impacting the value of the naira.
However, he expressed caution, stating that while a reduction in demand for dollars might occur, it wouldn’t result in a significant immediate gain for the naira. He explained, “Part of that NNPCL’s crude will be supplied to Dangote in naira and not dollars. So, you’re still going to expect that dollar supply will fall.” He remains optimistic that once Dangote fully operates and starts exporting, it could bring additional dollar inflow into the economy.
Adenikinju criticized the government’s handling of policy announcements, particularly regarding the zero-duty food import policy introduced in July. He expressed concern that little progress has been made in implementing this policy and called for better communication from the government. “I think it’s not being managed well. The government comes, makes some announcements, disappears, and in the interim we don’t know what is happening,” he stated. He underscored the need for ongoing dialogue with the public to build confidence and maintain trust in government actions.
He advocated for a structured approach to policy formulation, suggesting that the government should focus on long-term strategies rather than reactive, short-term fixes. “We should anchor our policies to a medium to long-term strategy,” he advised, emphasizing the importance of food security and self-sufficiency.
Prof. Adenikinju also discussed the critical need for Nigeria to achieve food security, particularly in light of its large population and agricultural potential. He highlighted the importance of reducing reliance on food imports, particularly from countries like Ukraine, which has been affected by war but continues to export food. “We import so much from Ukraine. What is the size of Ukraine that we are so dependent on?” he questioned.
He urged that Nigeria, with its vast land and diverse climates, should harness its agricultural capabilities to meet domestic needs and support job creation. “There are various climatic conditions we have to take advantage of the various food items we have,” he said, reinforcing the need for a strategic approach to agriculture.
Overall, Prof. Adeola Adenikinju’s insights underscore the urgent need for reforms in Nigeria’s fuel production and economic management systems. He called for transparency, market liberalization, effective communication, and a focus on long-term strategies to enhance public confidence and improve the nation’s economic landscape. By addressing these issues, Nigeria can work towards greater self-sufficiency and stability in its fuel and food sectors.
SOURCE: News Hub Creator
