Professor Izielen Agbon, a Petroleum engineer and economist, has called for a reduction in the price of Premium Motor Spirit (PMS), popularly known as petrol, alongside a higher minimum wage and automatic cost-of-living adjustment to protect Nigerian workers from the effects of rising fuel prices and inflation.
Agbon spoke at a webinar organised by the Alliance On Surviving COVID-19 and Beyond (ASCAB) with the theme; ‘Working-class Solution to PMS price increase and fuel subsidy removal’. He suggested that the government should adopt production cost pricing for petroleum products produced from the 445,000 barrels per day domestic crude allocation reserved for Nigerian National Petroleum Company Limited (NNPCL) refineries.
According to Agbon, the approach could bring the PMS pump price to between N435 and N687 per litre, or $0.33 to $0.52 per litre at an exchange rate of N1,333 to the dollar. He said a PMS price of $0.52 per litre would enable NNPCL to become a price setter in the market and break what he described as the “oligopolistic control” of the market by Dangote Petroleum Refinery.
Agbon noted that the struggle for lower petrol prices was closely linked to the demand for a living wage, adding that a 50-litre tank currently costs about N63,250 to N70,000. “The monthly minimum wage of a worker of N70,000 can only buy 50 litres of petrol,” he said, adding that an average worker labours for 3.2 hours to afford one litre of PMS.
He attributed the high cost of living and food inflation partly to fuel price increases and naira devaluation, while also noting that insecurity in food-producing regions had disrupted farming and supply chains. Agbon said the forthcoming minimum wage negotiation should include demands for higher basic pay and an automatic cost-of-living allowance (COLA) adjustment to cushion workers against the inflationary effects of higher PMS prices and naira devaluation.
Agbon also called for the repair of the four NNPCL refineries, as well as the passage of anti-trust legislation by the National Assembly. According to him, lower PMS prices and a higher COLA-indexed minimum wage should form part of workers’ demands in the campaign for the 2027 election.
Femi Falana, human rights activist who is the Chairman of the event said the public discussion was necessary in view of the hardship caused by the high cost of petrol following the removal of subsidy. He noted that Nigerian workers could no longer continue to bear the burden of rising PMS prices and their impact on household incomes and the cost of living.
Key points
- Agbon suggests production cost pricing to determine PMS prices.
- A higher minimum wage and automatic cost-of-living adjustment are also proposed.
- The goal is to cushion Nigerians against rising fuel prices and inflation.
