Featured, Oil & Gas
By Anthony Isibor
WHEN President Bola Tinubu announced the removal of subsidy on petrol during his inaugural speech last year, he said that the decision was premised on the need to ensure long-term energy security and economic prosperity for the country.
Buttressing that point, the minister of Information and national orientation, Mohammed Idris, during the just concluded Nigerian International Energy Summit, NIES, insisted that the petrol subsidy had, over the years, strained the country’s economy, leading to inefficiencies and most importantly, hindering ability to invest in critical areas of energy security.
However, stakeholders and concerned Nigerians have continued to question the reality of the removal, noting that when the price of the product in-country is compared to the international market price, it leaves so much questions unanswered.
In a recent interview with Omar Farouk Ibrahim, Executive Secretary, Africa Petroleum Producers Organization, APPO, told Realnews that the petrol subsidy removal was now a dilemma.
He wondered how the same government that took an action to stop subsidizing fuel and allow the market to determine the price is now reassuring people that there won’t be an additional increase in petrol prices.
“If there won’t be an additional increase, it means that the government will have to subsidize,” he said.
According to him, the government should have fixed the issues of refineries to ensure that Nigeria refines its crude in-country first, before removing petrol subsidy.
By so doing, it can decide that petrol must be sold at any certain price, that way, it is controlled.
“Subsidy, whether you like it or not will come back because the government didn’t say it is floating. If they have said it is floating, fine. Then it is immaterial. If it goes up people will pay more and if it goes down, people will pay less.
“But the government fixed the price and that price they don’t have control over; they don’t control the international oil price, what they control is Nigerian oil price and since the Nigerian oil price is tied to the international oil market, there is nothing they can do.
“The point is, we produce crude, but we don’t process it. We import it. One, we have no control over our foreign exchange, two, we have no control over the international price of oil, we have little or no control over shipping and insurance. So we are at the mercy of all of these variables.”
According to reports, foreign institutions, particularly the International Monetary Fund, IMF, have argued that, with the depreciation of the naira, the price of fuel per litre should have increased from around ₦600 to over ₦1,000, indicating that the government is surreptitiously paying subsidy on the commodity.
Also, Robert Dickerman, Managing Director, Pinnacle Oil said during the just concluded NIES in Abuja that the federal government was paying up ₦1 trillion in petrol subsidy monthly.
He explained that the practice is the major reason why the cost of the product is low in Nigeria, thus encouraging smuggling to neighbouring countries.
“With legacy monetary policymaking currency exchange difficult, we desperately need Foreign Investment. This is a reality. So the best policy during this time of crisis is a national policy to transform our economy/regulations/laws to accommodate and encourage FDI.
“Foreign investors, foreign lenders and government-run DFIs have been very clear about what they want to see: Conservative fiscal policy, tackling corruption, enabling competitive markets, and enforcement of fairness in markets through policy, regulation and the ability to enforce contracts. Keeping that context in mind, I want to point out that there is still a massive subsidy in PMS, albeit in the FX portion of PMS price,” he said.
Realnews reports that the price of petroleum products nationwide is at all time high, indicating that the government has taken its hands off fixing of prices.
A.I
-March 04, 2024 @ 12:18 GMT|
Tags: Mohammed Idris Omar Farouk Ibrahim President Bola Tinubu Robert Dickerman
