On Tuesday, Nigerians woke up to yet another hike in petrol prices by the Nigerian National Petroleum Corporation, the second in three weeks that saw pump prices hit N1,060 per litre at its retail stations in the Federal Capital Territory and N1,025 in Lagos. Oil marketers say they foresee further price hikes in the short term as the full force of the Bola Tinubu administration’s deregulation policy permeates the market. The latest increase signals a 570 percent increase in petrol prices since President Tinubu’s “subsidy is gone” proclamation on May 29, 2023, when the petrol price was N185 per litre and a dollar was N460.

Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said at the presentation of the Nigeria Development Update by the World Bank in Abuja last Thursday that “fuel and FX subsidies are extinguished,” noting that the twin policies had drained over N10 trillion from the economy.

While the government insists that fuel subsidy removal and foreign exchange market liberalisation are necessary to prevent imminent economic collapse, the reality for Nigerians today is a collapse of their personal and corporate finances. With inflation spiralling to a record 34.8 percent in June triggered largely by soaring food and energy costs and the pass-through effect of the threefold devaluation of the naira in an import-dependent economy, Nigerian citizens have been rendered despondent, desperate, distressed and disillusioned. The ultimate remit of any responsible government is the welfare and happiness of citizens. Tinubu’s economic reforms must present a human face. It needs not come with so much pain.

The irony of the fuel subsidy removal and price hikes, coming with the commencement of local petrol refining by Dangote Refining and Petrochemical Company, is not lost on Nigerians. Indeed, the expectations of lower petrol prices, especially with the crude-for-naira sales arrangement for local refiners have quickly evaporated. This arrangement delivers zero benefits to consumers since the prices are still tied to the dollar exchange rate of the naira which recently won the odious tag of the worst-performing currency globally.

It is obvious that as the naira continues to sink amid unmet dollar demand pressures, petrol prices will continue to rise despite cooling crude prices, worsening inflation and the cost-of-living crisis that has seen food, medicines, transportation and decent housing well out of reach of most households. Even local oil marketers are at risk of collapse as daily demand for petrol fell sharply by 92 percent from 60 million litres in May to 4.2 million litres in August per Nigerian Midstream and Downstream Petroleum Regulatory Authority.

The National President of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Dele Oye, posited last Tuesday that the persistent decline in the currency’s value is largely a product of poor management and ineffective monetary policies by the Central Bank of Nigeria. This means that rising domestic fuel prices negate any global price relief. In effect, Nigerians would be trapped in an unending cycle of escalating prices if the naira exchange rate fails to stabilise.

The implications of petrol price hikes in Nigeria are universal. The government must take immediate steps to mitigate the consequential privations imposed on citizens and businesses by these current reforms if they are to benefit from any projected benefits.

There are no rules that mandate Nigeria to sell crude to the domestic market at international prices. Crude can be sold at a discount in naira to local refiners to bring down fuel prices that are simply not affordable. Also, any savings derived from petrol subsidy removal must be redirected towards supporting the increasing numbers of poor Nigerians and beleaguered businesses forced into survival mode.

The average Nigerian household spends about 59 percent of its income on food, the highest in the world according to a recent report from Picodi. It is disconcerting that the Tinubu administration has failed to implement the 150-day tariff suspension for certain food items announced in July. The window must be extended by another six to 12 months without further delay to include more items, especially cooking oil.

There must be tariff suspension on pharmaceuticals, medical consumables and equipment, educational items, and industrial raw materials machinery for FMCG and food and beverage industries. The tax relief for individuals and businesses proposed in the economic stabilisation plan must be implemented immediately. Crucially, the discriminatory electricity tariff must be reversed for industries and households. Instead, the government must deliver on strengthening the national grid to boost increased supply.

The government must prioritise the effectiveness of its conditional cash transfer scheme to ensure that immediate and substantial cash relief is made available to the poorest households using credible data from banks and established government institutions, not political party machinery.

Mass starvation and business failures need not be the consequence of economic reforms in Nigeria.