November 14, (THEWILL) – The Independent Petroleum Marketers Association of Nigeria (lPMAN), has condemned the payment of subsidy on Premium Motor Spirit, popularly known as petrol.
The National Operations Controller of lPMAN, Mike Osatuyi, in an interview with the News Agency of Nigeria (NAN), on Monday, in Lagos, declared that petrol subsidy is no longer sustainable.
Osatuyi said this against the backdrop of the ongoing hike in the pump price of petrol in filling stations across the country.
He said the federal government had N20.51 trillion expenditure in the 2023 budget against a revenue of N9.7 trillion, leaving a deficit of N10.78 trillion.
Osatuyi said the government hoped to finance subsidies on petrol up to June 2023, at the cost of N3.6 trillion, using the Central Bank of Nigeria’s (CBN) official rate of N435 to a dollar.
“At present, the CBN official rate is hovering around N445 to a dollar, which is above the N435 to a dollar projected in the 2023 budget”, he said, adding that the subsidy regime had led to an increase in budget deficit.
He also said subsidy had made smuggling of petrol a striving business because of the huge profit involved.
“Subsidy regime does not allow competition, while monopoly is the language of petrol business, as the Nigerian National Petroleum Company (NNPC) Ltd. is the sole importer, manager and distributor of petrol.
“Subsidy kills efficiency in the procurement and supply chain of petrol business operations and deprives the government of huge revenue”, he said.
Osatuyi noted that Nigeria’s petrol was cheaper at landing cost compared to neighbouring countries.
He urged the government to put all necessary palliatives in place, to cushion the negative effects of the imminent increase in price of petrol before removing subsidy.
“Nigeria’s debt servicing of N6.3 trillion per year is not healthy for the country, with mere capital expenditure of N5.35 trillion.
“2023 budget projected crude oil production of 1.69 million per day, which is achievable in view of pragmatic measures taken by the government for pipeline surveillance and zero tolerance to crude oil theft”, he said.
Osatuyi said the Group Chief Executive of NNPC, Malam Mele Kyari, confirmed that the cost of petrol was around N510 per litre without subsidy.
He added that if CBN made forex available at an official rate to the importers at N445 to a dollar, pump price of 510 per litre was achievable.
“As of October 2022, the exchange rate of naira to dollar stood at N445 against N435 projected in the 2023 budget.
“If CBN failed to avail marketers forex at an official rate of N445 to a dollar after deregulation, importers will have no choice but to turn to the black market for forex, which will push up the pump price of petrol to between N650 to N700 per litre.
“Total deregulation remains the best solution to ending fuel scarcity.
“The deregulation of the downstream sector remains the only potent and lasting solution to scarcity.
“But the cost implication of the policy will make the price of petrol too expensive for Nigerians, as deregulation will shift the burden from the government to users of the product”, he said.
