Reps Call for Immediate Fuel, Gas Price Drop

Fuel, Gas Price Reduction Sought

“Nigerians are worried that the escalating fuel and gas prices are impacting on the...”

House of Reps Calls for Immediate Action on Petrol Price Hike: Waiving Taxes, fiversifying energy sources & supporting citizens.

Nigeria's House of Representatives has urged the Federal Government to reverse the recent hikes in petrol and cooking gas prices. The Nigeria National Petroleum Company Limited (NNPCL) has raised petrol prices twice in the last month, causing the product to sell for over N1,000, while a kilogram of gas costs N1,500 or more.

Minority Leader Kingsley Chinda made the call to reduce prices in a motion at the plenary session in Abuja. Chinda stressed the need for targeted interventions, such as tax reductions or subsidies, to provide relief to low-income households struggling with the high cost of cooking gas, also known as liquefied petroleum gas (LPG).

Pointers:

Petrol Price Hike: NNPCL raised petrol prices twice in the last month, exceeding N1,000.

Cooking Gas Price: A kilogram of gas costs N1,500 or more.

Call to Action: House of Representatives urges Federal Government to reverse price hikes.

Relief Measures: Proposed interventions include tax reductions or subsidies for low-income households.

Historically, Nigeria has experienced fluctuations in petrol prices, with prices increasing from 6k to N145 between the late 1960s and 2021. The country's reliance on imported refined petroleum products contributes to price volatility. To address this, the government has promised to increase local refining capacity and develop the petrochemical industry.

“Nigerians are worried that the escalating fuel and gas prices are impacting on the transportation, food, essential goods and healthcare as well as increasing inflation,” he said.

“Further push on the prices of these two items had exposed many families into deeper financial hardship. Businesses, particularly small and medium enterprises are struggling to manage their operational costs due to increased fuel prices, threatening economic stability and job security.

“The Federal Government has the refining capacity to address some of these issues but has yet to deliver significant results in this regard.

“The rising cost of petrol and cooking gas poses a significant threat to the livelihood of millions of Nigerians and unchecked inflationary pressure caused by the increased prices can lead to social unrest, increased poverty rates, and negative long-term economic effects.”

Nigeria, as a major oil-producing nation, has long relied on petroleum products and cooking gas to meet its domestic and industrial energy needs. However, the recent surge in prices of these essential energy sources has put an unbearable financial strain on ordinary Nigerians, making the cost of living increasingly unsustainable.

The country's dependence on oil and gas is deeply ingrained, with over 80% of its power generation coming from gas reserves. Yet, this reliance on fossil fuels has become economically burdensome, especially with the skyrocketing prices of petrol and cooking gas. To mitigate this, Nigeria aims to achieve universal energy access by 2030 and transition to cleaner energy sources.

Major Challenges:

Insufficient Power Generation: Nigeria's energy sector faces significant financial and technical challenges, including inadequate infrastructure.

Energy Poverty: Approximately 71% of the population lacks access to energy, hindering economic development and health.

Environmental Concerns: The country's reliance on fossil fuels contributes to greenhouse gas emissions, necessitating a shift towards renewable energy sources.

Potential Solutions:

Renewable Energy Investments: Attracting investments in solar, wind, and hydroelectric power to reduce dependence on fossil fuels.

Energy Efficiency: Improving energy efficiency in buildings, industries, and transportation to minimize energy waste.

Diversification: Exploring alternative energy sources, such as nuclear power, to ensure a more sustainable energy mix.

The removal of fuel subsidies, coupled with global oil price fluctuations and the naira's depreciation, has substantially driven up the cost of petrol and cooking gas for Nigerian households. This perfect storm of factors has created a challenging economic environment, making it difficult for many families to afford basic energy needs.

In Nigeria, petrol and cooking gas prices are highly sensitive to global market trends and exchange rates. The removal of fuel subsidies has eliminated a crucial buffer against price shocks, leaving consumers vulnerable to market volatility. Furthermore, the depreciation of the naira exacerbates the issue, as import costs rise, and domestic prices follow suit.

Factors Contributing to Rising Energy Costs:

Removal of Fuel Subsidies: Eliminated government support, exposing consumers to full market prices 

Global Oil Price Volatility: Fluctuations in international oil markets impact domestic prices

Naira Depreciation: Weakened currency increases import costs, driving up domestic prices.

These factors have far-reaching consequences, affecting not only household budgets but also the broader economy. As energy costs rise, so do the costs of goods and services, perpetuating a cycle of inflation.

“Nigerians are worried that the escalating fuel and gas prices are impacting on the transportation, food, essential goods and healthcare as well as increasing inflation,»he said.

“Further push on the prices of these two items had exposed many families into deeper financial hardship. Businesses, particularly small and medium enterprises are struggling to manage their operational costs due to increased fuel prices, threatening economic stability and job security.

“The Federal Government has the refining capacity to address some of these issues but has yet to deliver significant results in this regard.

“The rising cost of petrol and cooking gas poses a significant threat to the livelihood of millions of Nigerians and unchecked inflationary pressure caused by the increased prices can lead to social unrest, increased poverty rates, and negative long-term economic effects.”

The House of Representatives is taking proactive steps to address Nigeria's energy crisis. They're calling on the Nigerian National Petroleum Company Limited (NNPCL), Ministry of Petroleum Resources, and other relevant agencies to expedite the repair and maintenance of domestic refineries. This move aims to boost local production and reduce reliance on imported fuel.

To mitigate the impact of petrol price hikes on inflation, the House is urging the Central Bank of Nigeria to implement monetary policies that will cushion the effects on essential goods and services. This is crucial, as the rising cost of living is affecting many Nigerians.

Diversifying Nigeria's Energy Mix

The House is also advocating for the Federal Government to explore alternative energy sources and diversify the country's energy mix. This includes promoting renewable energy solutions that are more sustainable and affordable. Some potential alternatives include:

Biomass Energy: Nigeria can leverage its abundant biomass resources to generate electricity.

Hydropower Energy: Harnessing the power of Nigeria's rivers can provide a significant source of renewable energy.

Green Hydrogen-Based E-Fuels: Innovations like e-NG can help decarbonize industries and transportation.

Embracing these alternatives, Nigeria can reduce its reliance on petrol and gas, creating a more sustainable energy future.

Benefits of Diversification

• Increased energy security
• Reduced greenhouse gas emissions
• Improved air quality
• Economic benefits from investing in renewable energy

The Federal Government's Energy Transition Plan aims to achieve net-zero emissions by 2060. With the House's urging, Nigeria can accelerate its transition to a more sustainable energy mix, driving economic growth and environmental protection.