- IPMAN said the fuel subsidy was increasing due to the crash of the naira against the United States dollar and the cost of crude oil.
- Petrol, solely imported into Nigeria by the NNPCL, currently sells for N617/litre to N660/litre.
The Nigerian National Petroleum Company Limited and fuel marketers, under the aegis of the Independent Petroleum Marketers Association of Nigeria (IPMAN), clashed again over fuel subsidy removal. This came against the backdrop of the depreciation of the naira against the United States dollar at both the official Investors and Exporters Window and the parallel market. On Tuesday, naira closed at 998/dollar at the official market, while it traded at 1,225/dollar at the black market. Economists and oil marketers said the PMS subsidy has recently increased because of the falling naira rate. Still, the NNPC quickly countered these positions and declared it was recovering its total cost of importing Premium Motor Spirit (petrol).
The Chief Executive Officer of Financial Derivatives Company, Bismarck Rewane, explained during a live television programme on ChannelsTV on Sunday that fuel subsidy was not removed but reduced. Also, oil marketers noted that the fuel subsidy was increasing due to the crash of the naira against the United States dollar and the cost of crude oil. They argued that PMS should sell for N1,200/litre in a free market. Petrol, solely imported into Nigeria by the NNPCL, currently sells for between N617/litre and N660/litre, depending on the location of purchase in Nigeria. The National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu, stated that the subsidy on petrol was rising and that the cost of the commodity should be around N1,200/litre in a free market.
“To be pragmatic in this analysis, let’s consider the cost of petrol today in the United States. Premium petrol is $2.99, while super petrol sells for $3.15 or $3.10 depending on the part of the country where you are making the purchase. Now, $3 in Nigeria is over N3,000 because a dollar in the parallel market is over N1,000. You can also see the cost of diesel, which is over N1,000/litre, and it is essential to state that petrol is usually higher in price than diesel in a free market. So if you consider the cost of diesel, dollar and other international factors, the price of petrol in Nigeria should be around N1,200/litre, but the government is subsidising it, which to an extent is understandable,” he stated.
The IPMAN official noted that he had earlier explained that the government was implementing quasi-subsidy, which means that “the Federal Government decides to take out about 50 per cent instead of taking out the subsidy by 100 per cent.” Chinedu, however, expressed optimism again that the cost of refined petroleum products would reduce as soon as the Port Harcourt and Dangote refineries started producing the commodities. According to him, the operations of the refineries will help stabilise the price of PMS and other petroleum products in Nigeria by cutting down the importation of products.