We never reintroduced subsidy, says FG as more fuel stations shut
The Federal Government denied restoring the subsidy on Premium Motor Spirit, also known as petrol, on Monday, despite the closure of several filling stations around the country due to different issues in the downstream oil sector.
It further stated that the pockets of lineups seen by motorists at petrol stations around the country were caused by glitches in product distribution from the South to the North, rather than a lack of supplies.
This occurred as the Nigerian National Petroleum Company Limited announced on Monday that it would have gone bankrupt in June if President Bola Tinubu had not stopped subsidising PMS in May.
NNPCL further stated that if current efforts continue, Nigeria will become a net exporter of refined petroleum products by next year.
Nigeria, through the NNPCL, currently imports PMS and other refined petroleum products consumed across the country, which has been ongoing for decades.
The Group Chief Executive Officer, NNPCL, Mele Kyari, told State House Correspondents after an audience with the President at the Aso Rock Villa that fuel subsidy had not been returned.
“No subsidy whatsoever. We are recovering our full cost from the products that we import. We sell to the market, and we understand why the marketers are unable to import. We hope that they do it very quickly and these are some of the interventions the government is doing. There is no subsidy,” he stated.
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Kyari’s assertion came barely 48 hours after the Petroleum and Natural Gas Senior Staff Association of Nigeria confirmed the return of fuel subsidy.
Also, oil marketers had repeatedly stated that fuel subsidy had returned, as they explained that the landing cost of petrol as of last week was N720/litre. The commodity is currently sold at between N580/litre and N617/litre, depending on the area of purchase.
PENGASSAN’s National President, Festus Osifo, had said the government still subsidised petrol due to the cost of crude oil in the international market and the exchange rate.
“They [government] are paying subsidy today. In reality, today, there is subsidy because, as of when the earlier price was determined, the price of crude in the international market was around $80 for a barrel.
“But today, it has moved to about $93/94 per barrel for Brent crude. So, because it has moved, the price [of petroleum] also needed to move. The only reason the price will not move is when you can manage your exchange rate effectively and you can pump in supply and bring down the exchange rate.
“So, if the exchange rate comes down today, we will not be paying subsidy. But with the exchange rate value and the price of crude oil in the international market, we have introduced subsidy,” Osifo had explained.
In his inaugural address after taking the oath of office on May 29, 2023, Tinubu announced that the Federal Government was closing the curtains over the subsidy era.
While arguing that supply remained robust, Kyari explained that the full deregulation of the downstream sector had created market competition.
He said this phenomenon had led to minuscule price variations across gas stations, with consumers naturally patronising marketers with a lesser pump price.
The NNPC chief revealed that the firm was liaising with other oil marketers to address the forex challenges.
Kyari, speaking at a different function in Abuja on Monday, noted that the NNPCL would have gone bankrupt in June this year if Tinubu had not removed the subsidy on petrol.
He also revealed that about 25 licences that were meant for the construction of refineries in Nigeria had remained idle due to subsidies on refined petroleum products, particularly PMS.
He further stated that Nigeria would become a net exporter of refined petroleum products by 2024 based on concerted, ongoing efforts to get the country’s refineries running.
This came as oil marketers raised concern about the continuous closure of filling stations nationwide due to the crisis around foreign exchange and their inability to import petrol into Nigeria.
Speaking at the Energy and Labour Summit organised by the Petroleum and Natural Gas Senior Staff Association of Nigeria in Abuja, Kyari stated that NNPCL was spending over N400bn on PMS subsidy monthly.
He said the immediate halt of the scheme by Tinubu on the assumption of office on May 29, 2023, was a life-saver for the oil firm.