Inflation fears: New fuel price will have negative effect on industrial sector — MAN
The increase in pump price of Premium Motor Spirit (PMS), commonly known as petrol, by the Federal Government from N86:50 to N145 per litre is unsettling for many Nigerians, especially local manufacturers who buy petrol daily to power their generating sets for production.
At the office of Manufacturers Association of Nigeria (MAN) in Lagos, some manufacturers said that the new petrol price will have negative effect on the industrial sector of the economy, especially at the time when the nation's economy is on the verge of recession.
The Chairman, Toiletries & Cosmetics group of MAN, Mr. Ikpong Umoh, said, 'When it comes to the issue of petrol, we must be sincere because fuel scarcity disconnects manufacturing activities, adds to the cost of production much more than availability of the product. Government must openly tell us whether we are still operating a subsidy regime or not. A hike in fuel price from N86.50 to N145 is a huge increase of about almost 80 percent. Government and oil marketers would have added only a marginal increase and not a huge increase that will worsen inflation rate that is already 13.2 percent (double digit). This is because petrol affects the cost of transportation, food items, pharmaceutical products and all sectors of the entire economy. This huge increase in fuel price will have adverse effect on local industries that are already closing shop due to harsh operating environment.'
He went on, 'Marginal increase should have been allowed only in the short-run. In the long term, independent oil markets as well as other private investors should be given licenses to set up refineries across strategic locations in the country. Government should liberalise the oil and gas sector to enhance more investments inflow. For example, instead of importing refined petroleum products into the country, oil marketers can set up modular refineries and refine the product locally'.
On the new directive given by Power Minister, Mr. Babatunde Fashola, urging power Distribution Companies (DISCOs) to sell shares to new investors for fresh capital, he said, 'What the minister said will help the power companies to get more capital into the business. However, government must review the privatisation of PHCN and sale of its assets, because it is not yielding any positive result. The entire privatisation exercise looks like a fraud. The issue of power supply has become hydra-headed. It appears they sold PHCN to their friends and party members, who do not have the technical know-how to run the facilities but only keeps increasing tariff.'
'The monopoly of power companies must be broken. It is only in Nigeria and no where else in the world, that people are compelled to pay for products they are not consuming. The power companies only increase tariff and want people to pay more money without electricity supply. Why should public utilities be sold to individuals who do not have the expertise to manage them? Even after privatisation, the power firms collected billions of naira as bailout funds from government. Let them tell the public what they have done with all the money they collected from CBN.'
On the disagreement between MAN and DISCOs he said, 'The dialogue MAN had with DISCOs several times failed. That was why MAN said sanity must be put into system by taking the matter to court. While the matter is still in court, they must not disconnect MAN's members. Let DISCOs give people regular power supply and pre-paid meters to measure the level of consumption and consumers will be willing to pay the tariff.'
Our investigations revealed that, the previous government approved N18.26billion loans for five power companies to boost electricity supply, just after N5.2billion was given for similar purpose. N3.9billion was also approved for power transmission infrastructure, while N1.3 billion was approved for manpower development and training of 3,700 trainees, under the National Power Sector Apprenticeship Scheme(NAPSAS), even as government also said that N347 billion was needed for transmission to meet domestic and industrial consumption. – Vanguard.