NNPCL There is a fresh crisis between the Nigerian National Petroleum Company Limited (NNPC) and fuel marketers clashed on Tuesday over prices of the fuel in the world market.
The crisis is caused by the downward fall of Naira against the dollar as the exchange rate closed officially on Tuesday at N998/$ while it swings around N1225/$ in the black market.
The price dispute responsible for the clash between NNPC and the fuel marketers might be a confirmation of the claim by Bismarck Rewane, CEO of Financial Derivatives Company, who argued that the subsidy wasn’t abolished, but merely reduced, leading to a hidden transfer of wealth from consumers to the government.
He made this known during a live television program on ChannelsTV on Sunday as reported by the Punch.
He said, “At the inauguration, it was said that (fuel) subsidy was gone but subsidy was reduced.”
Buttressing his position, he explained, “There is the convergence of exchange rates and reducing the windows into one. The consequence of that is that money has been transferred from consumers to the government.
“Subsidies are reversed taxes; if you reduce them, you increase the people’s taxes and reduce their income. What has happened is that government revenue has increased by 44 percent between May and June (2023). Money has been transferred to the government, but what is the government doing with it?
“The consumers, on the other hand, had a minimum wage, which in dollar terms was $40 in 2002. In 2019, it was about $70, but it has now been reduced to $24.”
Similarly, oil marketers said the subsidy on petrol was increasing considering the crash of the naira against the United States dollar and the cost of crude oil. They added that PMS should sell for N1,200/liter in a free market.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) National Public Relations Officer, Chief Ukadike Chinedu, claims the petrol price should be around N1,200/liter, given the current dollar-diesel-petrol cost dynamic. He believes the government is implementing a “quasi-subsidy” by absorbing half the potential price increase.
He said: “To be pragmatic in this analysis let’s consider the cost of petrol today in the United States. For Premium petrol, it is $2.99, while super petrol sells for $3.15 or $3.10 depending on the part of the country where you are making the purchase.
“Now, $3 in Nigeria is over N3,000, because a dollar in the parallel market is over N1,000. You can also see the cost of diesel, which is over N1,000/liter, and it is important to state that petrol is usually higher in price than diesel in a free market.
“So if you consider the cost of diesel, dollar, and other international factors, the price of petrol in Nigeria should be around N1,200/liter, but the government is subsidizing it, which to an extent is understandable,” he stated.
“I also believe that there will be a reduction in the prices of petroleum products this year when you consider what the government is currently doing. The coming on board of the Port Harcourt refinery and the supply of crude to the Dangote refinery are good developments in the sector.
“Their operations will help stabilize the price of PMS and other petroleum products in Nigeria because it will cut down the importation of products,” Ukadike added.
Petrol is solely imported into Nigeria by the NNPCL. Presently, the commodity sells for between N617 per liter to N660 per liter.
Politics Nigeria reported, "Giving his take on the matter, the Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, who corroborated the stance of marketers, said there was partial subsidy on petrol, but noted that the commodity was subsidized by the government for political, social and economic reasons.
Amidst the accusations, the NNPC has denied the claims of partial subsidy. Chief Corporate Communications Officer, Olufemi Soneye, dismissed the claims as “assumptions” and said that the government no longer subsidizes petrol.
He said, “We prioritize our time on substantive matters rather than responding to assumptions.
“At NNPC Ltd, we prioritize national development through energy security and sustainable growth. We reiterate that the Nigerian government does not pay subsidies on fuel; we recover full costs from our imported products.
“As a global energy company, our focus remains on fostering a vibrant and energy-secure Nigeria.”
Category: World-News
Tag: Nigerians Projected to Buy Fuel at N1200 Per Litre
Written by Author (author)
Published 1/3/2024 5:19:07 PM