The Nigerian National Petroleum Company Limited (NNPC) and fuel marketers, represented by the Independent Petroleum Marketers Association of Nigeria, have engaged in a fresh clash over the controversial removal of subsidy on petrol. This disagreement occurs amid the backdrop of the naira’s depreciation against the United States dollar, affecting both the official Investors & Exporters Window and the parallel market.
On Tuesday, the local currency closed at 998/dollar at the official market and traded at 1,225/dollar at the black market, reflecting a concerning decline. Economic analysts and oil marketers contend that the subsidy on Premium Motor Spirit (PMS) is on the rise due to the falling naira rate. However, the NNPC refutes these claims, insisting that it is recovering its full cost on the importation of petrol.
Chief Executive Officer of the Financial Derivatives Company, Bismarck Rewane, clarified during a live television program that fuel subsidy was not entirely removed but reduced. Despite such explanations, oil marketers argue that subsidy on petrol is increasing, suggesting that PMS should be sold for N1,200/litre in a free market.
The NNPC, being Nigeria’s sole importer of petrol, maintains its stance that the Federal Government has ceased subsidy on petrol. President Bola Tinubu had made a formal declaration on May 29, 2023, asserting the removal of subsidy, a move implemented by the NNPC the following day.
The clash intensifies as dealers and experts contend that the NNPC is subsidizing petrol, while the Chief Corporate Communications Officer, Olufemi Soneye, dismisses these claims as assumptions. He emphasizes that the government does not pay subsidy on fuel, emphasizing the focus on fostering a vibrant and energy-secure Nigeria.
Marketers, however, project that the cost of petrol in a free market should be around N1,200/litre, considering international factors such as the cost of crude oil and the exchange rate. They suggest that the government is implementing a quasi-subsidy, opting for a partial removal rather than a complete elimination, to address economic, social, and political considerations.
Despite the clash, there is optimism among oil marketers that the prices of petroleum products may reduce with the operationalization of the Port Harcourt and Dangote refineries. These developments are expected to contribute to stabilizing the prices of refined products in Nigeria and reduce dependence on imports.
