The fog over deregulation, devaluation, electricity tariff hike
By Oludare Mayowa
“What is currently happening in the country is the reflection of a failed government that cannot manage a process and inadvertently pushing the cost of its failure to the majority of the people they ought to protect.”
Practically, the nation has been thrown into a frenzy these past days following the hike in the pump price of fuel and again the adjustment in the tariff for electricity consumption simultaneously.
From all the segments of the society, the consensus to a large extent is that the increases could cause further hardship for the citizens against the background of the already tough time being faced by many as a result of the impact of Covid-19 necessitated economic downturn.
The government had through its agencies in the course of the week hike the pump price of petrol to N151.8 per liters and increased the tariff on electricity consumption by as much as 70 percent.
These measures were first and foremost to meet the set conditions by the World Bank for Nigeria to obtain a $1.5 billion loans to support this year’s budget.
RELATED STORY: BudgIT Tackles President Buhari On High Cost Of Governance
The Bretton Wood Institution has asked Nigeria to remove all subsidies, including exchange rate differentials in the multiple segments of the foreign exchange market as a precondition for accessing the loan.
The government on its part has been striving to measure up to the dictate of the World Bank as the Central Bank of Nigeria (CBN) has devalued the naira twice this year, first in March and the second one in July to reflect the demand of the global lender.
Though the decision to reflect the market rate in the domestic foreign exchange market has not attracted much criticism from the general public because the majority have never benefited from the arbitrage going on in the market.
The hike in the petrol price and electricity consumption have been the major hit on the pockets of majority of Nigerians, who will have to cough our more money, that was not there to enable them access some of these facilities.
Already, with the increase in the price of petrol, the cost of transportations has gone up by more than 50 percent, while the hike in electricity tariff has not led to an improvement in the power supply.
For instance, at the Journalists Estate in Arepo, it has been two days off and less than eight hours on since the hike in electricity supply and what this means is that majority have to resort to buying fuel at a higher price to power their alternative energy supply, drilling more holes in their pockets.
The arguments in favour of the deregulations of the downstream sector of the petroleum industry have been that a price recovery mechanism will attract more investment in the sector and help to moderate pricing and increase product availability in the market.
READ THIS ALSO: Fidelity Bank Grows Deposit Portfolio By 14.75% In H1 2020
The unfortunate thing in the past five years, the government of President Mohammadu Buhari, that promised to fix the four refineries owned by the government has failed to do so and had rather embarked on endless turn around maintenance of the plants with huge resources down the drain.
The failure of the government to put life into its promises has led to the continuation of importations of the products and higher cost to the economy. Foreign exchange reserves have been negatively impacted by the dependent on importations of refined products, while additional cost of freight, demurrage and storage have been added to the pump price to further compounded the problem, pushing the bloated costs down to the people.
As to the electricity tariff new hike, the government has also failed to play its part in ensuring that the power distributions companies adhere strictly to the terms and conditions of the privatization of the sector.
The DisCos have not been able to provide meters for consumers while the majority are billed on the over-exaggerated estimated billing, yet consumers are been forced to invest in power infrastructure to enable them enjoy supply that has already been over paid for.
Recently, residents of the Journalists Estate have to cough out over N3.5 million to purchase another transformer to enable them have stable current, yet Ikeja Electric has failed to improved supply in the area, while majority of residents still have to pay for meters to enable the power distribution company to measure the supply.
What is currently happening in the country is the reflection of a failed government that cannot manage a process and inadvertently pushing the cost of its failure to the majority of the people they ought to protect.
Properly structured deregulation should ordinarily bring much sanity into the system, eliminate corruption, curtail inefficiency and reduce the hardship being hitherto suffered by the people.
However, in our country, the reverse is the case, rather than the deregulation of the downstream sector bringing in the desirable impact on the economy, the corruption in the system had continued to be a drag on whatever success that should have been achieved.
For instance, the four government-owned refineries have been shut down since last year for repair, there has been no headway in such repair, yet the government is recoding deficits in the operations of dead plants.
On the electricity front, the DisCos have been a law to themselves in terms of levied arbitrary charges on consumers as the customers have to bear the cost of purchasing transformers, pole and even cable to link their communities to the grid and still have to pay the DisCos before they energize their supply not to talk of the crazy billing due to lack of meters.
The role of the government is to ensure the welfare of the people and ensure that every institution that would ensure this are made to function properly and efficiently. But what we have been experiencing in the country is counter to the norm; even officials of the government often collude with such already inefficient system to frustrate the people.
The Buhari government should put its house in order, work toward fulfilling its promises to the masses and ensure that the system remains efficient and beneficial to the majority of the people.
Until the government learns to be upfront with the people on his policy, keep to its promises of curbing corruption and ensuring a nation that works, then the temper will subsist.#GFD