Thursday, June 19, 2008

Escalating price of diesel

The nation’s march to industrialization might be heading to the rocks if nothing is urgently done to halt the rise in the pump price of diesel. Before the recent leap in its price to a record high of about N135 per litre, diesel was sold at about N90 per litre.

The effect of this unofficial increase is already telling on the industrial and transport sectors of the economy that depend solely on diesel for their operations. Individual consumers are also ill at ease with the situation.

According to reports, industrialists are already groaning over the escalating price of diesel in view of the fact that their machines run on diesel on a daily basis given the near absence of electric power supply.

Reasons advanced for the ugly development range from the poor performance of the nation’s refineries at Warri and Port Harcourt to the fact that most of the functional refineries are performing below their installed capacities. As a result of these pitfalls, they have been unable to produce both the Premium Motor Spirit (PMS) and diesel at the same time.

The situation is so bad that marketers who had stationed their tankers for weeks at both refineries have been unable to load the product owing mainly to non-availability. There are also fears that the nation may run out of supply of diesel if the few marketers currently selling run out of stock.
We therefore call on the government to quickly intervene before the situation gets out of hand. Leaving the matter unattended to would definitely lead to hike in prices of goods and services. Such a trend is likely to worsen the rate of inflation in the country.

The economic crisis the situation would degenerate to, if left unchecked, would have deleterious effect on other sectors of the economy. Therefore, the government should work assiduously and make our electricity to work at optimum level. If the nation’s power generating utility had been up and doing, there would be little or no need for industries to run on generators.

The current sharp rise in the price of diesel might be a reaction to the increasing rise in the price of crude oil in the international market. But Nigeria’s case is made worse by the low performance of our existing refineries and our dependence on importation of refined petroleum products, including diesel.
It is ironical that a major producer and exporter of crude oil like Nigeria would depend on importation for its domestic petroleum products needs.

The government’s silence on the matter is dangerous. It is a flagrant display of high insensitivity to a national need that borders on our industrial growth and development. The government, rather than keep mute on the matter, should explain to Nigerians what is responsible for the hike in price of diesel. Nigerians deserve the right to be told what is really happening.

To halt the increase in the pump price of diesel, government should strive to make our refineries to work at installed capacity. It should also create the enabling environment for private refineries to come on stream. Above all, it should overhaul the nation’s refineries especially through the Turn Around Maintenance scheme with a view to making them efficient and productive.