FG Saves N400bn In Four Weeks Amid Fuel Subsidy Removal

The Federal Government has so far saved about N400bn as a result of the removal of subsidy on Premium Motor Spirit, popularly called petrol, since May 31, 2023, when the initiative was officially implemented, oil marketers stated on Thursday.

As a result of the Federal Government’s recent floating of the naira against the US dollar, the oil merchants also warned that there was a strong likelihood that the price of gasoline will increase in July.

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On June 14, 2023, the Central Bank of Nigeria combined the nation’s exchange rates into the window for investors and exporters, allowing market forces to determine the exchange rate.

Operators in the downstream oil sector told our correspondent on Tuesday that Nigeria had now saved hundreds of billions since ending the subsidy regime in May, based on the revelation of the Nigerian National Petroleum Company Limited regarding the amount being spent previously on subsidies every month.

“Right now they (the government) are making money. At least with this removal of subsidy, the government has racked in hundreds of billions, whether in naira or dollar. This is because every month we know how much they lose before,” the National President, Independent Petroleum Marketers Association of Nigeria, Chinedu Okonkwo, stated.

Okonkwo, citing statements made by the NNPCL’s Group Chief Executive Officer, Mele Kyari, during a meeting with oil sector players in February, informed our reporter that marketers had been informed of the amount of money the NNPCL spent on subsidies on a monthly basis.

“Today, by law and the provisions of the Appropriation Act, there is a subsidy on the supply of petroleum products, particularly imports of PMS into our country,” Kyari had remarked during the meeting. Three days ago, the landing cost was approximately N315 per litre in terms of current data.

“Our customers are here; we are transferring to each of them at N113/litre. That means there is a difference of close to N202 for every litre of PMS we import into this country. In computation, N202 multiplied by 66.5 million litres, multiplied by 30 will give you over N400bn of subsidy every month.”

Commenting on petrol imports by independent marketers, Okonkwo stated that the oil dealers were holding meetings about this.

“We are holding meetings with a lot of people who are interested in commencing PMS imports. We are not resting on our oars about this,” the IPMAN president stated.

Although Okonkwo admitted that petrol price would rise in response to forex rates, he argued that the removal of subsidy would not only lead to a continuous increase in PMS cost.

“When there is deregulation and no subsidy, the price of petrol would either go up or come down. If you want to profiteer, those who bring in and sell at cheaper rates would put you out of business.

“So the market fundamentals will determine the pricing and capping. Therefore the floating of the naira at this time that Nigeria is beginning to make savings is not going to be a fixed thing,” he stated.