Despite assurances by President Bola Ahmed Tinubu that the subsidy is gone, the federal government paid N169.4 billion as subsidy in August to keep the pump price at N620 per litre, Daily Trust reports.
There have been several reports suggesting that the current price stagnation despite the worsening exchange rate and international crude price crossing $95 a barrel suggests a return of subsidy.
A document by the Federal Account Allocation Committee (FAAC), shows that in August 2023, the Nigerian Liquefied Natural Gas (NLNG) paid $275m as dividends to Nigeria via NNPC Limited. NNPC Limited used $220m (N169.4 billion at N770/$) out of the $275m to pay for the PMS subsidy. Then NNPC held back $55m, illegally.
The revelation by FAAC effectively indicates that the subsidy is back and NNPC is now taking NLNG dividends to pay the subsidy.
According to oil and gas industry reports conducted by the Nigeria Extractive Industries Transparency Initiative (NEITI), the cost of petrol subsidy from 2015 to 2020 was N1.99 trillion.
Also reports by the Nigerian National Petroleum Corporation (NNPC) to the Federation Accounts Allocation Committee (FAAC), showed that petrol subsidy cost N1.57 trillion in 2021 alone and another N1.27 trillion from January to May 2022.
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The government thereafter budgeted N3 trillion to cover petrol subsidy costs from June 2022 to June 2023.
An aggregation of the entire costs showed that under President Muhammadu Buhari, the government spent N7.83 trillion on petrol subsidy.
Reacting, National President, Natural Oil and Gas Suppliers Association of Nigeria (NOGASA), Benneth Korie, said, “Definitely the price of PMS will go up as much as the dollar price goes up. If you are exchanging $1 for N950, it will go up.”
Another expert, Dr Wisdom O. Mogbolu, said, “I have said this repeatedly: we can’t think of removing subsidy without a functional refinery, without the stability of FX. For example, if the price of crude goes up, our petrol price must go up, now coupled with our volatile Fx, we must fix our system not kill the masses.”
The Chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Ejigbo Satellite Depot, Mr Akin Akinrinade, said stabilising the naira in the short term would be important to achieve the promise of the FG.
“There are two things that the government can do. The immediate one is the stability of the naira because as the price of dollars goes up, the price of petrol will go up. The government should intervene to ensure the stability of the Naira,” he said.
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