Oil marketers, on Tuesday, advised President Bola Tinubu to gradually ease the removal of subsidy on Premium Motor Spirit, commonly known as petrol. This recommendation follows the challenges faced by importers in accessing United States dollars and the resulting impact on businesses.
This advice comes as Tinubu dismisses the possibility of a fuel price hike or reversing the fuel subsidy.
However, petroleum product marketers encourage the President to take inspiration from Kenya, pointing out that the African nation had reintroduced the petrol subsidy to mitigate the adverse effects of its removal on Kenyan citizens.
“Neglecting necessary action will lead to dire consequences. We learned today that Kenya, after removing the subsidy and observing its harsh impact on citizens, has reinstated the subsidy for two months,” said Mohammed Shuaibu, Secretary of the Independent Petroleum Marketers Association of Nigeria in Abuja-Suleja, in conversation with our correspondent.
He added, “Government serves the people and must heed their voices. In Nigeria, with four dormant refineries despite being an oil-producing nation, we’re reliant on imports.”
“When Tinubu announced this (subsidy removal), we warned about the repercussions. Are we not experiencing them now? The cost of petroleum products here is largely determined by forex rates.”
“Marketers are reluctant to import products. If the government plans to temporarily ease subsidy removal, it should do so urgently.”
Shuaibu argued that despite the Nigerian National Petroleum Company Limited’s announcement that it won’t raise petrol prices, if the exchange rate keeps climbing, the cost could surpass the current N617/litre within weeks.
“Temporarily relaxing subsidy removal is a wise choice at this juncture. Given the dollar’s price, petrol costs will inevitably increase. Some oil marketers may even join labor unions in protest,” he added.
Some traders have speculated that a gradual return of petrol subsidy might occur if NNPCL continues selling at N617/litre, especially if forex rates persistently rise.
Chief Chinedu Ukadike, National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, stated that completely removing the subsidy would lead to severe hardships.
“I’ve said this even before petrol subsidy was removed. How can you end the subsidy without any palliative measures in place?”
“Trips that used to cost N5,000 now cost over N15,000. Businesses are closing, and suffering is rising. The government must act now,” he emphasized.
The IPMAN PRO had previously explained that the prices of imported goods, including petrol, will continue to rise with the increase in the dollar exchange rate.
NEITI Reacts
Simultaneously, the Nigeria Extractive Industries Transparency Initiative (NEITI) advised the government to establish and implement a deliberate policy to attract investors for revitalizing Nigeria’s refineries.
In their recent policy advisory for the oil sector, NEITI recommended that the Federal Government devise a purposeful policy to encourage private investments in refineries.
“Presidential support should back a deliberate policy initiative that encourages Nigerians and foreign investors with refinery licenses to invest in Nigeria.”
“These incentives may encompass tax breaks, institutional assistance, and making potential investors in the downstream sector aware of opportunities within the existing ‘Federal Government ease of doing business policy.'”
Also calling for intervention, Clement Isong, Executive Secretary of the Major Oil Marketers Association of Nigeria, stated that it was high time for the government to intervene.
“The President himself mentioned that if petrol prices surge excessively, the government will intervene. We don’t want prices to skyrocket.”
“If the dollar keeps climbing, we expect the government to intervene as the President indicated,” the MOMAN official stated.
Similarly, Benneth Korie, National President of the Natural Oil and Gas Suppliers Association of Nigeria, informed journalists that one of the best options for President Tinubu was to expedite the repair of Nigeria’s refineries.
Tinubu’s Response
Amidst the escalating cost of living due to the petrol subsidy removal, which has led to increased fuel prices, the Presidency stated on Tuesday that Nigeria currently boasts the most affordable petrol price in West Africa.
Ajuri Ngelale, the Special Adviser to the President on Media and Publicity, informed State House correspondents that daily fuel consumption had dropped from 67 million litres to 46 million litres after the subsidy was lifted.
Ngelale, who had a conversation with the President on Tuesday morning, emphasized the President’s call for stakeholders to remain calm. He deemed the organized labor’s threat of an indefinite strike premature.
“The President urges all stakeholders to maintain peace. We’ve recently heard from the organized labor movement regarding their recent threat.”
“We believe the threat is premature. All sides need to conduct fact-finding and diligence on the current state of the downstream and midstream petroleum industry before issuing conclusions or threats. Furthermore, the President affirms that there won’t be a petrol pump price increase,” Ngelale said.
Ngelale added that the deregulated market wouldn’t allow a single entity to monopolize it anymore.
“The market is deregulated and liberalized. We’re moving forward without turning back.”
“The President also affirms that there are inefficiencies in the midstream and downstream petroleum subsectors that need prompt addressing. This will enable us to maintain prices without reversing the current administration’s deregulation policy in the petroleum industry.”
Ngelale also noted that Tinubu approved the dissemination of a chart displaying PMS prices in other countries, illustrating the cost of PMS in West African nations.
He concluded, “Senegal’s current pump price is equivalent to N1,273 per liter, Guinea at N1,075 per liter, Côte d’Ivoire at N1,048 per litre in their currency, Mali at N1,113 per litre, Central African Republic at N1,414 per litre, while Nigeria presently averages between N568 and N630 per litre.”
“We’re currently the most affordable purchasing state in the West African sub-region by a considerable margin. No country is below N700 per liter.”
Meanwhile, the Nigerian National Petroleum Corporation, in a post around 11.48pm on Monday on its official X (formerly Twitter) account, affirmed that it had no intentions of increasing the petrol pump price.