Fuel price in Nigeria could hit N1000 in the coming days if the federal government does not intervene, expert economists’ have alerted.
The economists urged the federal government to intervene in the foreign exchange market to prevent the naira from free-falling against the dollar, therefore stifling rising petrol prices.
They advised the government to be careful not to allow market forces to determine the value of the naira, as Asian countries have not fully succumbed to the interaction of market forces, although it was desirable.
To control rising fuel prices, they called on the government to grant petroleum importers a special preferential exchange rate to bring products in at a cheaper price without interfering with variables in the international market.
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In the long term, experts have advised the government to repair all local refineries so that petroleum products can be refined locally to meet the country’s needs.
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They also advise the federal government to ensure the establishment of model refineries in the country to contest the loss of revenue that may arise from conventional refineries.
Moreover, they told the government of the urgent need to reduce oil theft to meet the country’s production quota set by the Organisation of Petroleum Producing Countries(OPEC) as this would increase the country’s foreign exchange earnings.
They also warned that allowing the country’s exchange rate to be determined by market forces could spell the end of the economy as much of manufacturing continues to reap profits from exports.
Chief Economist & Partner at SPM Professional, Paul Alaje, said:
“It is true that Nigerians may have to pay up to N1000 per liter because when we say the forces of demand and supply, it is purely international market that will detect the price. It is not a respecter of what Nigeria is earning or number of poor people in Nigeria. That is why we should be wary of following purely market forces.
“There is a role government has to play in any economy. And that is what the Asian economists have realised and have advocated that there is limitation to what the classical and neoclassical are teaching the public and those in authority; there is danger in market forces.
“We have, therefore, stated that as much as it is important for us to allow the forces of demand and supply to adjudicate prices, including FX, and PMS, it is therefore, also more important for government to intervene because of the large number of poor people that we have in our nation today.
“If it (petrol) goes to N1000 per litre, what does it mean? It means that the support government wants to give to people in terms of N8,000 is even insufficient abnitio as the price of PMS will continue to increase. We know that no matter how much government increase salaries, it cannot be done indefinitely, even the Federal Government’s income cannot double immediately. That is why it is important for us as a people, to be mindful of the theory that we apply and adopt in our system.”
