‘Trek-a-thon’ for Lagos Commuters as Fuel Price Hike Hits Hard
Sunday Ehigiator writes that aside from other hardships occasioned by the removal of fuel subsidy and subsequent increase in the pump price of petrol, many commuters in Lagos have been left with no other option than to trek to their various destinations daily due to the astronomical hike in cost of transportation, thus spiking unproductivity
After the Hilda Baci ‘Guinness World Record’ phenomenon, what manner of ‘a-thon’ have Nigerians not seen? From look-a-thon to cry-a-thon, dance-a-thon, snail-a-thon, tech-a-thon, laugh-a-thon, kiss-a-thon, sing-a-thon, massage-a-thon, and the latest being the government induced trek-a-thon Nigerians are currently grappling with.
Since the total removal of fuel subsidies, there has been an alarming number of Nigerians seen on the road trekking to their various destinations, even on a busy Monday morning. This is due to the effect of the increase in fuel price on the cost of transportation.
The Subsidy Scam
After his swearing-in on May 29, 2023, President Bola Tinubu removed fuel subsidies in Nigeria.
Fuel subsidy was riddled with corruption, manipulation and mismanagement. The N3.92 trillion allocated for petrol subsidy between January 2020 and June 2022 surpasses the combined federal budgets for healthcare, education, and defence throughout the 30 months.
Between 2006 and 2018, Nigeria spent about N10 trillion on petroleum subsidies. It gulped N5.82 trillion between 2021 and 2022 and N3.36 trillion being proposed for the first six months of 2023.
These figures indicate a significant drain on the government’s finances, impeding its ability to invest in crucial sectors which could bolster economic growth and people’s well-being.
Nigeria did not profit from the surge in oil prices occasioned by the Russian-Ukrain war, due to low oil output and the spike in fuel subsidy expenses.
As the country’s total public debt nears N80 trillion, it was not surprising why Governor Godwin Obaseki raised an alarm that “It would be a miracle for the Federal Government and state governments to pay salaries beyond June this year without resorting to massively printing of money or removing fuel subsidy. Either of these decisions will bring more hardship and pain to Nigerians, particularly workers.”
The consensus, however, was that subsidy was no longer sustainable and its removal will help end the syphoning, smuggling, and stealing of Nigeria’s Premium Motor Spirit (PMS) to other countries in the African continent. With this continuous theft and illicit trade along the borders, the country bleeds, economically, leaving the entire citizenry in utter impoverishment.
However, what Nigerians never expected was its sudden removal without plans already put in place to cushion the effect it will have on their well-being. They had expected a working refinery already in place, and an increase in the minimum wage, among other measures and palliatives to be in place before the eventual removal of subsidy, but this wasn’t so.
Nigeria Refinery Woes
Nigeria’s main downstream challenge is the lack of refining capacity, which pushes the State to rely heavily on imported products for domestic needs. As a result, the country has been unable to take full advantage of the current high oil prices.
The country has five public refineries, four of which are owned by the Nigerian government through the NNPC, while the fifth is owned and operated by Niger Delta Petroleum Resources (NDPR).
The two Port Harcourt Refineries have a total capacity of 210,000 bpd. They are operated by the Port Harcourt Refining Company (PHRC), a subsidiary of NNPC. The PHRC is made up of two refineries located at Alesa, Eleme, Rivers State.
The old refinery has a refining nameplate capacity of 60,000 bpd and was commissioned in 1965, while the new plant, which has a nameplate capacity of 150,000 bpd, was commissioned in 1989.
The plants utilise bonny light crude oil to produce LPG, PMS, dual-purpose kerosene (DPK), automotive gas oil (AGO), low-pour fuel oil and high-pour fuel oil.
The Warri refinery was established in 1978 and has a capacity of 125,000 bpd. The refinery is located at Ekpan, Warri, Delta State and is operated by the Warri Refining & Petrochemicals Company (WRPC), an NNPC subsidiary.
The refinery was installed as a complex conversion plant capable of producing LPG, PMS, DPK, AGO and fuel oil from a blend of Escravos and Ughelli crude oils. WRPC has a petrochemical plant complex that produces polypropylene and carbon black from the propylene-rich feedstock and decant oil from the fluid catalytic cracking unit.
The Kaduna Refinery has a capacity of 110,000 bpd and is located in Kaduna. The plant is run by Kaduna Refining and Petrochemicals (KRPC), a subsidiary of NNPC and has a complex conversion configuration.
KRPC has a fuel plant that was commissioned in 1983 and a 30,000-tonne-per-year petrochemical plant that was commissioned in 1988. The refining plant has two distillation units that utilise Escravos and Ughelli crude oils for fuel production and imported heavy crude oil for lube base oil, asphalt and waxes.
Products made by KRPC include LPG, PMS, household kerosene HHK, aviation turbine kerosene (ATK), AGO and fuel oil. The petrochemical plant produces linear alkyl benzene.
Last is the Ogbele refinery. The Ogbele Refinery is owned and operated by the NDPR, produces more than 1,000 bpd and is located in Ogbele, Rivers State. The plant produces diesel for internal consumption, while excess fuel is sold. The plant receives crude oil from the flow station operated by its upstream affiliate, the Niger Delta Exploration & Production Company.
Although the government has these five refineries, they have not properly functioned in years. The group managing director of NNPC, Mele Kyari, said in May 2022 that 25 years of bad management have seriously affected these refineries. He said that the key priority now is to improve their operations and maintenance (O&M). The O&M issue is longstanding in Nigeria.
He said each refinery will undergo a complete rehabilitation procedure to have them fully operational shortly. The Port Harcourt Refinery has already started its rehabilitation. The refinery is projected to operate at its full capacity of 210,000 bpd by 2025.
While the country hopes that the Dangote Refinery and the removal of subsidies will finally solve its downstream issues, rehabilitation is soon expected to start at the Kaduna and Warri facilities as well, but the timeframe for their rehabilitation is unclear, and definitely can’t cushion hardship currently faced by Nigerians due to the effect of subsidy removal.
Implications of Subsidy Removal
The removal of subsidy on petrol, thereby increasing the pump price of petrol to a record high of N600 has raised the level of hardship on the people nationwide.
Nigerians are currently confronted by daunting economic challenges as the cost of most goods and services has tripled, whereas the income of many citizens has remained the same. The 22.41 per cent inflation rate has eroded the value of what many have.
During his inauguration speech on May 29, as Nigeria’s 16th President, Bola Tinubu declared an end to the subsidy on Premium Motor Spirit, popularly called petrol.
By May 31, 2023, less than two days after the subsidy removal, the pump price of the commodity jumped from about N198/litre to an average of over N500/litre across the country. This triggered a widespread increase in the cost of goods and services nationwide, including transportation costs.
While many Nigerians struggled to reconcile themselves with the new reality, a few weeks ago, the pump price skyrocketed to an average of N600/litre, thereby many citizens had to dump their cars at home, boycott entering commercial vehicles and resort to trekking in their numbers, giving a feel of trek-a-thon.
This is not to underplay the economic hardship the subsidy removal has also brought on Nigerians who are fighting harder not to fall among the 101 million people predicted to become poor as a result of the removal of fuel subsidy without provision for palliatives.
101 Million May Become Poor
A recent report by the World Bank revealed that the removal of subsidies on petrol could increase the number of poor Nigerians to 101 million if the government failed to provide palliatives.
The bank said Nigeria had one of the highest inflation rates, which pushed an estimated four million people into poverty between January and May 2023. It disclosed this during the launch of the June 2023 edition of the Nigeria Development Update in Abuja.
The report revealed that about 7.1 million poor Nigerians would become poor if the Federal Government failed to compensate or provide palliatives for them, following the removal of fuel subsidy.
It said 89.8 million Nigerians were poor as of the beginning of this year, and an additional four million Nigerians became poor between January and May 2023, raising the figure to 93.8 million.
This latest projection means that the number of poor Nigerians will rise to 100.9 million if the government fails to compensate vulnerable citizens for the hardship imposed on them by fuel subsidy removal.
Proposed Palliatives
On July 13, President Tinubu asked the Senate to approve a borrowing request of $800 million. Tinubu in the letter explained that the loan will be used to scale up the national social safety net programme and will be sourced from the World Bank.
He assured that the federal government will transfer the sum of N8,000 monthly to 12 million poor and low-income households for six months, with a multiplier effect on about 60 million individuals. He said the money would be transferred directly to identified beneficiaries account.
He said in, “To guarantee the credibility of the process, digital transfers will be made directly to beneficiaries’ accounts and mobile wallets.
“It is expected that the programme will stimulate economic activities in the informal sector and improve nutrition, health, education, and human capital development of beneficiaries’ households.”
However, this proposal was strongly kicked against by the Nigeria Labour Congress (NLC), and the Trade Union Congress (TUC).
They are rather demanding a 300 per cent salary increase to enable workers to cope with the challenges imposed by the deteriorating economic situation that came with the removal of the controversial fuel subsidy.
The Tinubu administration has also received backlash from several well-meaning Nigerians who have expressed fears that the proposal was shredded in secrecy and dishonesty, especially as regards the potential beneficiary.
These fears were strongly fueled by the decision of Tinubu’s administration to tow the same lane as his predecessor, former President, Muhammadu Buhari and his antecedents of direct cash transfers to supposed vulnerable Nigerians and not being able to account for the money or visibly substantiate the impact.
Following the backlashes, Tinubu’s administration recalled the N8,000 proposal initiative for review and has since been pending.
States Initiatives
While several states are yet to roll out any form of palliative, including Lagos, Some state governments like Edo, Kwara, and Ogun States have rolled out strategies and initiatives to ameliorate the effect of the current hardships on their citizens.
The Edo State government announced the reduction of official working days for civil servants from five to three days a week. By this directive, workers will now work from home two days every week.
Apart from that, the plight of parents, teachers and pupils is also on the government’s radar as their commuting to school will be reduced. The government said it was also working on deepening the EdoBEST@Home initiative to create more virtual classrooms, thereby reducing the cost of commuting for parents, teachers and pupils.
In the same vein, civil servants in Kwara State would now only be working for three days in a week following an announcement by the state governor, Gov. Abdul-Rahman AbdulRazaq.
In addition to the reduction of the official working days for civil servants, Governor AbdulRazaq also approved the deployment of government buses to support the movement of students and workers in public tertiary institutions within the Ilorin metropolis and its environs.
“It is the second phase of the measures being put in place by the Kwara State government to cushion the effects of high energy implications on the people,” he said.
In Ogun State, Governor Dapo Abiodun approved a cash palliative of N10,000 for each public servant including pensioners to enable workers to cope with the economic shocks occasioned by the removal of Fuel Subsidy for a period of 3months in the first instance with effect from July 2023.
He also approved hazard allowance for all health and medical personnel in the State.
In the press statement signed by Secretary to the State Government, Tokunbo Talabi, the governor also approved the “immediate release of Letters of Promotion in respect of 2021 and 2022.
“Payment of March and April 2023 ‘Leave Bonuses’ for public servants in the state, and immediate cash-backing for the quarterly payment of gratuities to pensioners.
“The ministries, departments and agencies are to work out modalities of ensuring that 20 per cent of their staff strengths are off-duty daily to ease the effect of the recent increase in fuel price among Public Servants.
“Commencement of food palliatives to the vulnerable (Rice, Garri, Beans, Maize etcetera), also, the Gateway Trading Company has been mandated to establish food distribution outlets across the state and must sell the items at the rate obtainable in the market before the removal of fuel subsidy.
“The state is also establishing a commodity exchange to ensure optimisation of current and future investment in the Agro-allied sector of the economy in line with President Tinubu’s war on food insecurity.”
The government also approved the distribution of fertilizers and other farm inputs to farmers at subsidised and controlled prices, and full implementation of the administration’s Energy Transition Strategy with the launch of Electric Motorbikes and Tricycles all over the State, among others.
Uneasy Quiet in Lagos
For a state with an estimated population of over 16 million Nigerians, with a poverty rate pegged at 8.6 per cent, and an unemployment rate put at 37.16 per cent by the National Bureau of Statistics, one would expect an immediate rollout of palliative to ease the burden of removal of subsidy on the people like it did during the Covid-19 Pandemic era.
As the cost of transportation has soared by over 300 per cent, many of the residents are left with no option but to trek more than they have ever had to just to get to their destination.
While some now trek out-rightly to work, others trek halfway before entering a bus just to augment the high transportation cost. Some others have even resorted to driving bicycles to work despite the lack of designated bicycle routes in Lagos and in Nigeria as a whole, yet the Lagos State government is yet to roll out any palliative measure to cushion the subsidy removal effect.
Plans to Introduce Bicycles and Lack of Designated Routes
As part of efforts to cushion the effect of subsidy removal on transportation, and promote a cleaner environment and healthy lifestyle, the Federal Ministry of Transportation has encouraged Nigerians to consider bicycles as alternative means of commuting.
The Director, of Road Transport and Mass Transit Administration, Musa Ibrahim, who stated this at a one-day stakeholders sensitisation meeting held in Abuja, said the idea is to enhance and heighten the importance of cycling in Nigeria as it will lead to a drop in road crash incidences.
According to the Director, “The uniqueness, longevity and versatility of the bicycle as a simple, affordable, reliable, clean and environmentally fit sustainable means of transport, fostering environmental stewardship and health.”
He noted that proponents have equally encouraged the use of bicycles as a means of eradicating poverty, furthering sustainable development, strengthening education, including physical education, for children and young people; promoting health, preventing disease, and facilitating social inclusion.
Meanwhile, while the opinion of Musa Ibrahim is very valid, there lies an imminent danger in riding a bike in a country where there are no designated bicycle routes.
Cycling is a mode of transportation that has been credited with environmental, economic and health benefits. It is a sustainable, environmentally friendly non-motorised transportation that does not pollute the environment and requires less land use than other motorised transportation.
It is considered a cheap entry-level mode of transportation as it is affordable and easily assessable with little training to control it. Evidence shows that it helps to reduce cholesterol, boosts mental and brain power, achieve weight loss and keep certain medical conditions in check.
However, as lovely as it sounds, several cycling enthusiasts have lost their lives in Nigeria because of a lack of enabling facilities.
In December 2022, a co-founder of Vetiva Capital Management, Olaolu Mudasiru, was killed by a hit-and-run driver in Lagos State. A 28-year-old cyclist identified as Daniel was also killed in Delta State by a reckless driver. The trials of these kinds of deaths are long and all liked to the lack of designated bicycle routes in Nigeria.
The vehicle population keeps growing in Nigeria as owning a car is generally considered a sign of success.
According to the National Bureau of Statistics’ Q2 2018 report, it estimated that there are about 11,760,871 cars in Nigeria. Topping the chart are Lagos and Kano with about 50 per cent of the total number, leaving cyclists and pedestrians at the mercy of impatient drivers.
Without a properly designated bicycle route across the country, encouraging more Nigerians to shift to cycling as a means of transportation is tantamount to leading them to their early graves, and fueling an increase in road fatality, as there are more reckless drivers on a free road than a cautious one.
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What Nigerians never expected was its sudden removal without plans already put in place to cushion the effect it will have on their well-being. They had expected a working refinery already in place, and an increase in the minimum wage, among other measures and palliatives to be in place before the eventual removal of subsidy, but this wasn’t so
