RESTORE THE PETROLEUM EQUALISATION FUND 

There is a massive call for President Bola Ahmed Tinubu to bring back the petroleum subsidy. The ongoing 10-day “EndBadGovernance” protest and the high prices of commodities and services are the products of the removal of fuel subsidies.

If President Tinubu has no plans to restore petroleum subsidies, the government must look for another way to reduce the price of petroleum products, especially petrol. Petrol is the lifeblood of any nation. The social problems arising from the aftermath of petroleum subsidy removal are purely local issues that require both theoretical and practical solutions. 

Sometimes, the government relies solely on experts who understand the problem from a theoretical perspective, forgetting the real players in the petroleum industry who understand the problem from all its angles: importation, depot loading, haulage, retailing, and manpower management.

Apart from the subsidy, there are other ways to effectively reduce the price of petrol drastically. Tinubu should critically consider the restoration of the Petroleum Equalisation Fund (PEF). Since it is a contributory fund, the source of the fund is principally the net surplus revenue recovered from oil marketing companies. The bridging claims paid to the petroleum marketers automatically equalise petroleum prices throughout Nigeria while maintaining their affordability. There is an innovative electronic business solution, Aquila, that has completely eliminated any irregularities in the distribution and claims of bridged regulated petroleum products. The Aquila project is an excellent electronic business solution designed to track the movement of petroleum products throughout Nigeria.

Though the Petroleum Industry Act (PIA), budgetary provisions, and some economic reasons were the guiding principles that led Tinubu to decide to remove subsidies and float the naira, sometimes national interests—security, economic, and social order—must be paramount. It’s purely a local problem that requires purely home-grown solutions.

There are countries that painstakingly control the prices of petrol for national security. These countries often have uniform prices for petrol across the entire country. For example, Saudi Arabia, the United Arab Emirates, India, Malaysia, Iran, and Venezuela. In most of these countries, national security overrides other considerations; the government has significant control over fuel pricing and distribution, often through subsidies or state-owned oil companies.

Taking India for instance, India controls petrol prices through a combination of market dynamics and government policies, like daily price adjustments based on the international price of crude oil. The Indian government sometimes provides subsidies to control the prices of petroleum products. This helps in keeping the prices within a certain range and makes them more affordable for the general public. The Indian government achieves this through the national oil companies Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL). Another mechanism used by India in the price control measures to address inflation concerns, freight, and logistics, is that the government can intervene directly by adjusting excise duties or providing relief to the oil marketers.

The Tinubu government should critically look at the reintroduction of the Petroleum Equalisation Fund. It will sharply reduce the prices of petrol, bring uniformity in prices throughout Nigeria, bring the 21 NNPC depots to life, restore many jobs lost, and double-check product quality.

Zayyad I. Muhammad, Abuja