The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has stated that fuel prices in Nigeria would be sold at prices between N360 and N400 per litre when the government removes the petroleum subsidy. This announcement was made by Festus Osifo, PENGASSAN president, during a press conference on the sidelines of the association’s National Executive Council meeting (NEC) in Abuja earlier this week.
The news came after other stakeholders in the downstream sector of the Nigerian petroleum industry said that subsidy removal would push fuel prices to N750 per litre. Nigeria’s Minister of Finance, Zainab Ahmed, had earlier stated that the government will begin the implementation of its fuel subsidy policy in the second quarter of the year.
Mr. Osifo made it clear that the Nigerian National Petroleum Corporation (NNPC) Limited, which is the only importer of premium motor spirit (PMS), will set the price of petroleum using the Central Bank of Nigeria (CBN) exchange rate. The NNPC now uses the CBN exchange rate, which results in a price that ranges from N400 to N450 depending on the day and the window.
“Today, the sole importer of PMS into Nigeria is the NNPC. The NNPC is using an exchange rate of the CBN which gives about N400 to N450 depending on the day and depending on the window that you are looking at. So, if you compute that into the model today, PMS should be selling for a region of about N360 to N400,” Mr. Osifo said.
PENGASSAN has also urged all its organs nationwide to make fuel available for Nigerians and warned petroleum marketers hoarding petrol that their licenses will be revoked. The organization also added that functional local refineries are a way forward to make fuel more affordable and create jobs for Nigerians, thereby urging the government to look into the matter.
“While maintaining our support for the full deregulation of the sector and the significant milestone achieved in this regard, we counsel that efforts be made to increase the pace of the current rehabilitation exercise of refineries and get them back on track in due time,” he said (as reported by The Premium Times.
Concluding his statement, Mr. Osifo said that the incoming government must address the currency swap and fuel scarcity across the country while providing palliatives to mitigate the impact of the removal of petroleum subsidies.
Nigeria has been debating fuel subsidy removal for years. Various governments have attempted to stop subsidies from the country's oil sector, but unsuccessful. While some Nigerians feel that fuel subsidy is a channel for money laundering, others believe Nigeria should maintain the subsidy to keep low fuel prices.
Nigeria has been debating fuel subsidy removal for years. Various governments have attempted to stop subsidies from the country's oil sector, but unsuccessful. While some Nigerians feel that fuel subsidy is a channel for money laundering, others believe Nigeria should maintain the subsidy to keep low fuel prices.
In addition, the Nigerian oil sector has been plagued with corruption for years, and the fuel subsidy has not helped matters. Prices have been in flux and fuel scarcity is becoming a norm, despite Nigeria being one of the world's leading oil producers.
It is not clear if the subsidy will be removed this time, but if it is successful, it could open the door to a new era of economic experimentation for the country and close years of a fuel subsidy that was prone to corruption and misappropriation of funds.
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