Data seen by BusinessDay has countered the new subsidy denial position of the federal government, asserting that Nigeria now pays more than the amount paid before President Bola Tinubu stopped the costly practice last May.
In a strongly-worded statement on Thursday, Bayo Onanuga, the president’s special adviser on information and strategy, dismissed the viral documents, describing them as unofficial and merely policy proposals still under review at the highest levels.
He urged the public and media to disregard them.
“They are all policy proposals that are still subject to reviews at the highest level of government. Indeed, one has ‘draft’ clearly written on it.
“The government wants to restate that its position on fuel subsidy has not changed from what President Bola Ahmed Tinubu declared on 29 May 2023. The fuel subsidy regime has ended.
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“There is no N5.4 trillion being provisioned for it in 2024, as being widely speculated and discussed,” Onanuga stated.
BusinessDay findings showed the landing cost of Premium Motor Spirit, PMS, otherwise known as petrol rose by 46.8 per cent to an average of N1,026.71 per litre in May 2024, from N545.83 per litre, recorded in the corresponding period of 2023, when Tinubu declared subsidy is gone.
The landing cost excludes other additional costs which include depot-related charges, transportation logistics and marketers’ margin, which would combine to bring delivery at filling stations at nearly N1,100/litre compared to N529 it was in July.
This glaring figure raises concerns about the truism of the government’s position on the complete end of the costly subsidy.
“What is, however, surprising is the government not being sincere on the actual demand, which in my estimate is not more than 35m litres per day,” Kelvin Emmanuel, an economist and CEO of Dairy Hills said.
He added, “The crux for PMS subsidy is mostly from a depreciating naira. And the first step is for the government to hands off NNPC by handing it over to an asset manager, who will — audit, strip, re-engineer and send to markets for business transformation”.
Marketers’ groups such as the Independent Petroleum Marketers Association of Nigeria and Depots and Petroleum Products Marketers Association of Nigeria called by BusinessDay at the time of filing this report declined to comment on the matter.
“Are the Nigerian population paying for the market price of petrol? If you look at our petrol prices and what the exchange rate is at the NAFEM, you will realise that there’s a disconnect,” Samuel Sule, chief executive officer of Renaissance Capital Africa said.
“Why we are not paying the market price has a more political point because where does the income come from?” he questioned.
On the economic impact of the back-door fuel subsidy, the economist stated that the revenue invested in subsidies could be used for other programs that could benefit the people.
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Before the removal of the popular petrol subsidy in May 2023, the naira was N460 at the official market but has slumped by over 100 percent in one year to N1,476.95 as of Monday.
At the parallel market, Nigeria’s local currency was sold at N760 per US dollars before the pronouncement of the termination of fuel subsidy but the naira fell to N1,488 on Friday buoyed by different macroeconomic policies of the federal government.
“I want to point out that there is still a massive subsidy in PMS, albeit in the FX portion of PMS Price, not the global price in dollars,” Robert Dickerman, managing director, Pinnacle Oil and Gas Limited said while speaking during a panel session six, on Nigeria’s Downstream Forum at the just-concluded Nigeria International Energy Summit (NIES) in Abuja.
Till date, the state-owned oil company remains the sole importer of petrol into Nigeria, despite the passing of the Petroleum Industry Act 2021 and the deregulation of the downstream sector, which allows for other private oil marketers who are licensed to import the product into the country.
However, accessing forex required for the importation of the commodity has proved difficult, leading to them depending on the state-owned oil company.
More than 90 licensed marketers, tasked with importing petroleum products into Nigeria, find themselves hamstrung by an unresolved price differential, rendering them unable to bring in any products nearly nine months after Tinubu announced the deregulation of the downstream segment of the petroleum industry.
“NNPC Lt needs to shed off its downstream business, invest heavily in becoming an operator, reduce the unit production cost per barrel, audit the forward sales agreement, transform its joint venture model, and provision for more commercial domestic refiners, that can enable Nigeria become energy sufficient,” Emmanuel said.
