Nigeria’s Presidency has addressed misconceptions regarding the Federal Government’s stance on fuel subsidy, emphasising that the current administration remains committed to deregulating the petroleum sector. This clarification follows recent reports about the Nigerian National Petroleum Company (NNPC) Limited’s $6 billion debt to suppliers.
Special Adviser to the President on Information and Strategy, Bayo Onanuga, clarified on his verified X handle that the government has adhered to its policy of eliminating fuel subsidies since President Tinubu announced the deregulation of the Premium Motor Spirit (PMS) sector on May 29, 2023. Onanuga stated that fuel subsidy provisions have been removed from the budget, including the Supplementary budget for 2023 and the amended 2024 budget.
Onanuga explained that NNPC’s admission of owing suppliers was not indicative of a subsidy payment but rather a reflection of the company’s effort to manage rising petrol costs and protect Nigerian consumers. He highlighted that the company’s ability to absorb these costs has been strained by increasing crude oil prices and the devaluation of the Naira.
He noted that the NNPC’s current financial strain could jeopardize its ability to continue operations without risking insolvency. Onanuga pointed to the anticipated impact of the Dangote refinery and other local refineries as potential solutions to these challenges. Once operational, these refineries are expected to supply fuel domestically, create jobs, and reduce the country’s reliance on imported petroleum products.
In his words, “So the giddy headlines about the so-called unravelling of the Tinubu government’s subsidy payment; and return of subsidy were not justifiable. Rather what has unravelled was the commendable disposition of the oil company owned by all the tiers of government to absorb the rising costs of petrol at the pump and protect the Nigerian consumer.
“That generous disposition by NNPC Limited, backed by a compassionate President unwilling to let the people suffer, has been under threat for months, because of the rising cost of crude and the devalued Naira.
“The NNPC cried out recently because it can no longer sustain the price differential on its balance sheet without becoming insolvent. The situation has greater implications for the ability of the three tiers of government to function as the NNPC has failed to pay into the Federation Account, the money that should go to the government.
“There are no easy choices. Something must be done to make NNPC survive, and keep the engines of government running and petrol flowing at the pumps. That is the scenario that is unfolding and the game changer and big relief giver may well be the Dangote refinery and other local refineries which will become the fuel suppliers to the local market.
“When Dangote Refinery and other refineries, including government-owned Port Harcourt Refinery, come fully on stream, our country and economy will benefit on all fronts. There will be many good-paying jobs that will be created along the value chain. There will also be a drop in the huge demand for foreign exchange to import petroleum products,” Onanuga said.