The reduction of the pump price of petrol by the federal government is revealing. This is that government fiat as opposed to the market forces dictates the price. In a functioning market this will be unthinkable. Unfortunately Nigeria’s oil scene is opaque, controlled by cartels and lubricated by corruption. Elsewhere on the contrary, in the last few weeks there has been a market directed brutal price war amongst retailers which has dictated the price of fuel.
In this situation life is good for the consumer. In this ‘the consumer is king, mode the consumer as well as the law of demand and supply reigns supreme. The outcome has been a boom in consumer goods as a result of increased spending out of savings extracted from lower fuel prices. No such thing is going to happen here. This is because there is a perception that the price reduction is aligned to the political current. Can it be sustained? After all this is far from being the first time we will have government directed fuel price cuts .Inevitably there has always been an erosion overtime (inflation adjusted) of the ‘gains’. The cynical consumer probably thinks the gains will be eroded as usual after the elections. Not surprising this; for we do not know the calculus within which the price of N87 came about from N97. Why not N80 or N75? The answer lies in the opacity and rigged markets of our operations. Things have to change. We must now build a new market driven platform driven by competition as opposed to cartels. It is also time to confront the corruption in and the structural defect of the national oil company head on. After the elections whoever wins must find the resolve as well as the political will to do so. And about time too.
