In a direct challenge to the Federal Government’s stance, oil marketers have maintained that the current price of Premium Motor Spirit (PMS), commonly referred to as petrol, should not be less than N800 per litre if there is no subsidy in place.
As it stands, petrol is presently retailing between N580 and N617 per litre, contingent on the location of purchase. The Federal Government, through the Nigerian National Petroleum Company Limited (NNPCL), has consistently denied the reintroduction of subsidies on PMS.
On Monday, the Group Chief Executive Officer of NNPCL, Mele Kyari, refuted claims of petrol subsidy reinstatement, attributing queues at petrol stations across the nation to hiccups in product distribution from the South to the North, rather than a supply shortage.
Kyari asserted, “No subsidy whatsoever. We are recovering our full cost from the products that we import. We sell to the market, and we understand why the marketers are unable to import. We hope that they do it very quickly, and these are some of the interventions the government is doing. There is no subsidy.”
However, oil marketers had repeatedly argued that fuel subsidies had been reinstated, citing the landing cost of petrol, which was N720 per litre the previous week.
In a sharp response on Tuesday, they criticized Kyari for asserting that the government was not subsidizing PMS, contending that PMS subsidies have indeed returned.
The National Secretary of the Independent Petroleum Marketers Association of Nigeria, Chief John Kekeocha, expressed, “I don’t know why the government keeps peddling lies. They are subsidizing products as we speak. They are spending billions of naira to subsidize products, and because they know that this country may go on fire if Nigerians buy products at about N1,000 per litre, they keep twisting facts.”
Kekeocha emphasized that many marketers couldn’t afford the high cost of diesel, which further compounded the problem in the downstream sector. Independent marketers, who control about 80 percent of filling stations in the country, were struggling to compete due to the soaring cost of diesel and currency exchange issues.
The National President of the Natural Oil and Gas Suppliers Association of Nigeria, Benneth Korie, added that filling stations were closing due to the high cost of importation, distribution, and the reintroduction of subsidy. He called for urgent government intervention to address the situation and emphasized the need to revive the country’s refineries to reduce dependency on imports and alleviate the high costs.
The oil marketers also revealed that no other private marketer, apart from the NNPC, had imported petrol recently. This situation has contributed to the persisting petrol price, as the government is determined to keep it below a certain threshold due to subsidies.
Fuel Subsidy Costs the Government N4.8 Trillion Annually
In related news, the Nigerian Midstream and Downstream Petroleum Regulatory Authority disclosed that fuel subsidy is causing a substantial burden on the government, amounting to approximately N4.8 trillion annually.
According to Farouk Ahmed, the CEO of NMDPRA, the financial implications of PMS subsidy have escalated to over N400 billion per month, translating to over N4.8 trillion (or $6 billion) annually, making it unsustainable in the short to medium term. He also noted that it significantly impacts government revenues, limiting the government’s ability to fulfill its obligations.
The CEO further explained that fuel subsidies have been a part of Nigeria’s petroleum landscape since the 1970s when the government sold petrol to citizens below cost. However, Ahmed emphasized the need to discontinue this practice, citing its negative impact on the fiscal viability of the government and the downstream petroleum sector’s inclusiveness.