The Lagos Chamber of Commerce and Industry (LCCI) has expressed concerns about the recent fuel price hike in Nigeria, stating that the petrol subsidy regime is unsustainable.
With the official price of petrol now at N855, the Chamber notes that this is a clear indication that the shortfall between the landing cost and the former price level of N568 charged by NNPC has been reduced, accumulating a debt of N10 trillion.
While acknowledging the need for fiscal responsibility, LCCI warns that completely removing the subsidy and subjecting Nigerians to a significant fuel price hike presents significant challenges.
A statement signed by the Director General of LCCI, Dr. Chinyere Almona, says a steep price hike would likely trigger widespread price increases, potentially reversing the recent easing in inflation seen in July and leading to another surge in inflation rates.
“The impact on businesses will be severe, with fuel prices affecting supply and logistics, power generation, transportation, and factory operations.
“The cost of doing business will skyrocket, prices of goods will rise, and some firms may shut down due to low demand in the face of weakening consumer purchasing power, leading to job losses.
“However, the operation of the Dangote Refinery, which now produces fuel and diesel for sale, offers a glimmer of hope.
“This game-changing intervention could restore some stability to the oil and gas sector, which has been grappling with significant distortions this year.” The statement read
LCCI advocates for a more sustainable approach, supporting the development of additional local refineries to process crude for local consumption and potential export across Africa. This long-term strategy is crucial for the stability and growth of our economy.
As an immediate intervention, LCCI recommends that the Port Harcourt Refinery commence operations alongside production from the Dangote Refinery.
The Chamber stressed that relying on local production may be the most viable option at this time, sustaining local supplies with the expectation that demand will eventually align with supply, leading to equilibrium pricing across various sources.
Comment here