Ordinarily, a cul-de-sac refers to a street closed at one end, a term derived from the French meaning “bottom of a sack.” In the context of Nigeria’s economy, it symbolizes the dead-end created by the government’s policies of petrol subsidy removal and naira flotation.
Under President Bola Tinubu’s administration, there appears to be a significant underestimation of how deeply embedded petrol subsidies are in our economy. The removal of these subsidies has led to astronomical price increases in goods and services, making basic necessities, including food, increasingly unattainable for many Nigerians. The widening gap between the rich and the poor has deepened, effectively wiping out the middle class.
For instance, the price of petrol surged from N187 per litre on May 28, 2023, to N568, and now to N855. Despite hopes that the Dangote Refinery would alleviate some pressure, the reality is that petrol from this source is expected to be sold at N950 per litre, exacerbating transport and food costs.
To address these challenges and renew hope as promised in the Renewed Hope Agenda, I advise the president to reconsider the subsidy approach—not as it was before, but with a new perspective. A key strategy would be for the government to make a bold political decision regarding the price of crude allocated for local consumption.
Currently, the prevailing price of Bonny Light crude at the International Petroleum Exchange is about $78.62. With the naira’s depreciation, this translates to approximately N129,329.90. Selling crude to local refineries, like Dangote’s, at this global price in naira does not help the situation. Instead, it forces refineries to seek hard currency to operate, which ultimately inflates local prices.
Historically, Nigeria allocated 450,000 barrels of crude for domestic use, which, before the refineries fell into disrepair, were processed for local consumption. Now, with the refineries dormant, NNPCL has resorted to importing refined products, which becomes increasingly costly with the naira’s decline.
If the current trajectory continues, we could see petrol prices soaring to N2,000 per litre or more, leaving the average Nigerian in dire economic straits.
To mitigate this impending crisis, I urge those benefiting from the current economic struggles to temper their greed. The government should sell crude to Dangote Refinery at half the international price—approximately N64,664.95 per barrel. Given that one barrel produces about 159 litres of petrol, this strategy could significantly lower local prices and provide relief to consumers.
This approach not only serves the immediate economic needs of Nigerians but also works toward a more sustainable and equitable energy system in the long run.