Oil Marketers Stand Firm On Fuel Subsidy Reintroduction

Date:

Oil marketers remain resolute in their assertion that fuel subsidy is back, directly contradicting the Federal Government’s position. They insist that the current price of Premium Motor Spirit (PMS), commonly referred to as petrol, should not be lower than N800 per litre if there is no subsidy in place.

Despite the government’s denial of the reintroduction of the PMS subsidy, petrol is currently being sold at prices ranging from N580 to N617 per litre, varying by location. Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), reiterated the absence of a subsidy, attributing recent queues at petrol stations to distribution challenges, and not a supply shortage.

However, oil marketers have consistently maintained that the subsidy on fuel has been reinstated, pointing to a landing cost of N720 per litre as of last week. They criticised the government for removing the subsidy without a thorough consideration of the consequences, and quietly reintroducing it.

According to Chief John Kekeocha, the National Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), the government’s claims are misleading. He affirmed that the cost of fuel and diesel is rising due to the need for imports and the current foreign exchange rates. Kekeocha believes that subsidy is the only factor preventing the price of a litre of fuel from reaching N800 or more.

He argues that the government should have focused on making refineries operational to reduce reliance on imports, but this was not addressed initially. As a result, independent marketers, who control approximately 80% of filling stations, are struggling to compete due to high diesel costs and forex issues, leading to a reduction in the number of operational filling stations.

Benneth Korie, the National President of the Natural Oil and Gas Suppliers Association of Nigeria, concurs that fuel subsidy has gradually resurfaced, and highlights the need for government intervention to prevent the closure of filling stations and petroleum tankers due to high importation costs. Among their recommendations is declaring a state of emergency on refineries and providing palliatives for diesel importation.

This challenging situation in the downstream oil sector is further complicated by the fact that private marketers have been unable to influence the NNPCL to adjust prices to match landing costs: leading to a persistent gap in petrol prices.

Meanwhile, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) reports that fuel subsidy is costing the government around N4.8 trillion annually; placing a significant burden on government finances and hindering its ability to fulfill obligations. Farouk Ahmed, the CEO of NMDPRA, stated that this subsidy is unsustainable in the short to medium term, and has been a long-standing issue that needs to be addressed.

 

 

 

 

 

 

 

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