Nigerian govt still pays subsidy on petrol – PENGASSAN
President Bola Tinubu had announced the end of payment of subsidy on petrol by the government in May.
The National President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Festus Osifo, on Friday, said the Nigerian government has restored subsidy on petrol, despite the official government policy of breaking with the subsidy regime since May.
Mr Osifo, who is also the president of the Trade Union Congress (TUC), one of Nigeria’s two largest worker’s union coalitions, disclosed this on Friday while featuring on a Channels Television programme, Politics Today.“The government has to come clean. In reality today, there is subsidy because as of when the earlier price was determined, the price of crude in the international market was somewhere around less than $80 to a barrel. But today, it has moved to about $93/94 per barrel for Brent crude. So, because it has moved, then the price (of petrol) also needed to move,” Mr Osifo said.The TUC, alongside its sister labour coalition, the Nigeria Labour Congress (NLC), has organised workers’ protests and declared nationwide strikes on different occasions to pressure the government to address the hardship caused millions of Nigerians by the removal of subsidy on fuel in May.President Bola Tinubu had announced the removal of fuel subsidy in his inaugural speech on 29 May.
Following the announcement, the NNPCL directed its outlets nationwide to sell fuel between N480 and N570 per litre, an almost 200 per cent increase from the initial price below N200, leading to significant increase in transportation fares and prices of goods and services.
Again in July, petrol pump prices rose to N617 per litre at various outlets of the NNPCL in Abuja and other parts of the country.At the time, the NNPCL attributed the rise in the petroleum pump prices in the country to ‘market forces’.
The NNPCL Group Chief Executive Officer, Mele Kyari, while speaking to journalists after a closed-door meeting with Vice President Kashim Shettima at the State House in Abuja, said with the deregulation of the oil sector, market realities will force the price of petrol up sometimes and at other times force it down.
In August, Mr Tinubu assured Nigerians that there would be no further increase in the pump price of petrol, despite the deregulation of the product.The Special Adviser to the President on Media and Publicity, Ajuri Ngelale, disclosed this while briefing journalists in Abuja after a closed-door meeting with the president.
“The president wishes to assure Nigerians, following the announcements by the Nigerian National Petroleum Company Limited (NNPC) just yesterday, that there will be no increase in the pump price of petroleum motor spirit anywhere in the country,” the spokesperson said. “We repeat, the president affirms that there will be no increase in the pump price of petroleum motor spirit”.
Mr Tinubu also acknowledged that there are inefficiencies within the downstream sector that are contributing to the fuel price controversy. He assured that all loopholes associated with the smooth delivery of petroleum products in the country will be addressed immediately.
There have been speculations about the possibility that the government had partly reintroduced fuel subsidy, unannounced, to keep the pump price at N617, given the continued fall in the value of naira against the dollar since the petrol pump price was last increased in July. Since Nigeria depends mainly on imported refined products, apart price of crude oil, exchange rate is a key determiner pump prices petrol is sold to consumers.
SUBSIDY IS BACK
Speaking on Friday, Mr Osifo said due to the cost of crude oil in the international market and the exchange rate, the government still pays subsidies on petrol.
“The speculation has been there looking at the fundamentals because two basic things that contribute to the pricing today are the exchange rate and the price of the crude in the international market.“
You know, in the last few weeks, the price of crude has been going up, and inches towards $95 per barrel. Based on this, there are speculations that there may be an increase in the price of Premium Motor Spirit (PMS) but behind the scenes, we have been engaging the government and trying to make them understand that there is no basis for that.ⓘ“Because for us, you know when they floated the exchange rate, you would recall that the exchange rate was moving at a very fast speed before some interventions came,” Mr Osifo said.
He also said: “Today the official exchange rate is around N770 per dollar. So what we have told them is that all international agencies, if you look at JP Morgan, Bank of America and all, they have said that our naira today is undervalued. What that means is that our naira should be exchanged somewhere around N600 to N630 to a dollar.
