By Adewale Sanyaolu
Clear indications emerged at the weekend that the Federal Government has fully returned to the era of fuel subsidy payment which it hitherto suspended on May 29, 2023 over its sustainability challenhes and the pressure it exerted on the nation’s lean resources.
Special Adviser to the President on Energy, Mrs Olu Verheijen, at a media briefing last weeken in Abuja, admitted that the Federal Government has continued to intervene in the per litre price of Premium Motor Spirit (PMS), popularly called petrol sold in the country, despite removing subsidy on the product.
Verheijen said government has the prerogative to cushion the harsh effects of its policies on citizens, adding that what the President Bola Ahmed Tinubu administration is doing with regards to the fuel price regime is consistent with global practices.
“On May 29, 2023, subsidy was removed. However, government has the prerogative, whether in the US, in the West, and other eastern countries, all governments have the prerogative to maintain price stability and to (mitigate) social unrest.
So, if prices are (moving up), they have the right to intervene. It’s not only in the US, during COVID-19, there were lots of interventions and there were also subsidies. All governments reserve that right.
And so, if for any reason, the administration has reviewed that it is not the right time to have prices continue to fluctuate, given the level of hardship in the country, given inflation, the government has the right to intervene intermittently. All governments do so.”
Daily Sun investigations revealed that fuel subsidies secretly found its way back into the system in August 2023 and have gulped about N1.14 trillion monthly from then till February 2024 and still ongoing.
The return to fuel subsidy is premised on the rising cost of crude oil in the international market, fluctuating exchange rates which has left many fuel marketers to vacate the import space, leaving the role solely to the Nigerian National Petroleum Company Limited as the importer of last resort
On May 29, 2023, during his swearing-in speech, President Bola Tinubu, announced an end to petrol subsidy, triggering a hike in the prices of goods and services in the country.
‘‘We commend the decision of the outgoing administration in phasing out the petrol subsidy regime which has increasingly favoured the rich more than the poor. Subsidy can no longer justify its ever-increasing costs in the wake of drying resources. We shall instead re-channel the funds into better investment in public infrastructure, education, health care and jobs that will materially improve the lives of millions,’’
On August 1, 2023, President Bola Tinubu, in a nationwide broadcast, revealed that the Federal Government of Nigeria has saved N1tn in the two months (June and July) since the removal of the petrol subsidy.
Tinubu said these monies that would have been otherwise squandered by those he called “smugglers and fraudsters” will now be channeled into intervention programmes targeting families nationwide.
He stated, “In a little over two months, we have saved over a trillion Naira that would have been squandered on the unproductive fuel subsidy which only benefitted smugglers and fraudsters.”
Daily Sun had last Friday reported that that the actual landing cost of petrol has hit N1,424 per liter as against N568/per liter at NNPC retail outlets and N600 to N700 at other retails outlets.
Statistics from the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) puts Nigeria’s daily petrol consumption at 44.3 million litres per day.
If the actual landing cost of N1,424 per litre is deducted from the NNPC retail price of N568 per litre,that gives a subsidy of N856 per litre.
When N856 per litre is multiplied by the daily consumption figure of 44.3 litres, that further gives a monthly fuel subsidy of N1.14 trillion.
National Vice President, Independent Petroleum Marketers Association of Nigeria(IPMAN), Hammed Fashola, said since NNPCL is the sole important of fuel, operators had no choice but to accept what it said.
“As we all know, the NNPC is the sole importer of petroleum products, especially PMS. And they have come out to tell us that they are not paying subsidy. We regard whatever the NNPCL says as the government talking. They are the importer of petrol, if they had come out to say they are not paying subsidy, what do we do? We have to believe them. So, I believe the NNPCL, If they say they are not paying subsidy, it means they are not paying.
A former Bauchi State Governor, Isa Yuguda, last week confirmed that the Federal Government still pays subsidy on petrol, though minimal.
Yuguda who was a guest on Channels Television’s Politics Today programme said a complete removal will inflict untold hardship on Nigerians, even as he urged states to judiciously make use of the double allocations that they now get by channeling it to drive down the cost of products in the economy.
In his intervention, at the Major Energies Marketers Association of Nigeria (MEMAN) Quarterly Press Webinar and Engagement with the topic ‘‘Advantages of Autogas (LPG and CNG) and the Evolving Price of PMS held last Thursday, Managing Director of 11 Plc, formerly Mobil Oil Plc, Mr. Tunji Oyebanji, said ‘‘Prices of gasoline in a fully deregulated environment would probably be closer to the price of diesel’’.
According to Daily Sun findings across major depots in Apapa, yesterday, the ex-depot price for diesel and petrol stands at; N1,424 per litre and N623 per litre, respectively while MEMAN figures put diesel price at N1,200 as at February 2024.
However, the Executive Secretary of MEMAN,Mr. Clement Isong, said he wouldn’t be able to speak categorically on the landing cost of petrol because his members have seized to import fuel.
He worried that when the market operates an exchange rate model that is speculative that further fuels inflation and makes the cost of replacement difficult, saying rates have been fluctuating.
“With this scenario it becomes difficult for me to determine the actual landing cost of petrol because rates have moved from N1,900 to a dollar to N1,800 and now to N1,600. So, in this case, it becomes difficult to adopt a particular exchange rate for the purposes of calculation.
If I give you a number that doesn’t contextualise what I am saying to you and I don’t know the opportunities in the market because I am not in the market. So, I want to be extremely careful in telling you what the landing cost is. Rather, I would rather say you should direct the question to NNPC because they are in a better place to answer since they are the ones importing’’.