Oil marketers have recommended a gradual approach to President Bola Tinubu for easing the removal of subsidies on Premium Motor Spirit (petrol), citing challenges faced by importers in accessing United States dollars and the consequent impact on businesses.
While President Tinubu has firmly rejected fuel price hikes and the reversal of fuel subsidies, petroleum product marketers have pointed to the case of Kenya as a lesson to learn from. They highlight that Kenya reintroduced petrol subsidies due to the severe adverse effects of their removal on the well-being of its citizens.
Mohammed Shuaibu, the Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN) in Abuja-Suleja, stated, “Neglecting necessary actions will inevitably lead to repercussions. We have learned that Kenya, after experiencing the harsh consequences of subsidy removal on its citizens, has recently reinstated the subsidy for two months.”
Shuaibu emphasized, “Government’s responsibility lies in prioritizing the welfare of its people and being receptive to feedback. It’s baffling that Nigeria, an oil-producing nation with four refineries, is forced to rely on imports due to their non-operational status.”
“From the moment the government announced subsidy removal,” Shuaibu continued, “we anticipated these challenges. The repercussions are now palpable. Foreign exchange rates largely influence the cost of petroleum products. Given the hesitancy among marketers to import products, the Government should urgently consider a temporary relaxation of subsidy removal.”
Shuaibu argued that even though the Nigerian National Petroleum Company Limited had previously stated that petrol prices would not rise, the commodity’s cost could surpass the current N617 per litre if the trend of increasing exchange rates persists.
“At this juncture,” he remarked, “a prudent approach would be to gradually ease subsidy removal, considering the escalating value of the dollar. Some oil marketers are even contemplating joining labour unions in protest.”
Should the Nigerian National Petroleum Company Limited persist with the N617 per litre price, industry insiders speculate that petrol subsidies may eventually be reintroduced, especially if the upward trajectory of forex rates continues.
Chief Chinedu Ukadike, National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, stressed that an abrupt elimination of subsidies would inflict significant hardships. “This concern was raised well before petrol subsidies were lifted. Removing subsidies without implementing compensatory measures is a matter of concern,” he said.
Ukadike explained that the prices of imported goods, including petrol, will continue to rise with the strengthening dollar. “A decline in the naira against the dollar will inevitably have an impact. The demand and supply of forex have far-reaching implications. It’s important to note that various commodities rely on foreign exchange.”
Overall, oil marketers are urging a cautious and considerate approach to subsidy removal, considering the broader economic repercussions and potential hardships it might impose on the population.