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Fuel crisis: Marketers demand N700 billion monthly subsidy
By: Adisa Deborah
According to oil marketers, Dangote refinery’s monthly Premium Motor Spirit subsidy has climbed to almost N707 billion. Heineken Lokpobiri, Minister of State for Petroleum Resources, met with executives from the Dangote Refinery, Nigerian National Petroleum Company Limited, and other regulatory authorities to discuss the crude oil supply situation and prospective product exports. The House of Representatives has formed an investigation committee to investigate the lack of crude oil supply for domestic refineries.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) has attacked the Federal Government’s petroleum product subsidy (PMS), claiming it is unsustainable and could result in higher fuel pump prices. The landing cost of diesel and aviation fuel is greater than the pump price of petrol, with NNPC’s ex-depot price being N585/liter. Independent marketers, who administer petrol at higher rates, frequently receive the commodity at a higher price. The difference between the landing cost and the ex-depot price is N532, suggesting that each liter of fuel used in Nigeria is subsidized by around N532.
The Federal Government and NNPC have stated that there is no petrol subsidy, however, MEMAN’s newest numbers show a monthly subsidy of more than N700 billion. The landing cost of petrol exceeds N1,100 per liter, meaning that the monthly subsidy has surpassed N700 billion. The Nigerian government should have allowed for the complete deregulation of the downstream industry, given that NNPC is the sole importer of this product. The government should open up the market to competition and allow investors to enter and compete favorably, as this would cause product prices to fall.
Despite objections from some, the Nigerian federal government is now adopting a fuel subsidy strategy. Olufemi Soneye, NNPC’s Chief Corporate Communications Officer, has denied that the subsidy is still in effect, adding that the firm is recovering all costs from imported products. Malam Mele Kyari, NNPC’s GCEO, indicated that fuel subsidies have not been repaid and that the government is attempting to address import issues. However, Chief Ukadike Chinedu, IPMAN’s Public Relations Officer, stated that fuel prices should be higher than N900/liter if the product is not subsidized. MEMAN’s revelation of the N1,117/liter fuel landing cost suggests that the government is still implementing the subsidy through NNPC.
Dangote Industries Limited, a Nigerian refinery, is considering selling its output to other countries due to challenges in obtaining crude oil from overseas firms. The company exported around 3.5 billion litres of refined petroleum products, representing for 90% of its output. Nigerians are concerned about the expense of Alhaji Aliko Dangote’s product, which intends to eliminate petroleum product imports and give more affordable energy access. The company’s spokesperson, Tony Chiejina, reiterated that their stance is “Nigeria First.” Prof. Wumi Iledare, an energy specialist, claimed that exporting PMS is legal as long as laws are followed.
The Nigerian House Committees on Petroleum Resources are looking into allegations of a deliberate rise in crude oil prices for profit. Deputy Speaker Benjamin Kalu criticized fuel lines, higher PMS pricing, and a lack of feedstock for local refineries. The Nigerian Midstream and Downstream Petroleum Regulatory Authority, in collaboration with the Nigerian Standards Organisation, will conduct a legislative forensic investigation, involving in-depth laboratory inspections at local refineries, marketers, importers, regulatory authorities, and state oil businesses.
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