The Nigerian National Petroleum Company Limited (NNPCL) and fuel marketers, represented by the Independent Petroleum Marketers Association of Nigeria, found themselves in another clash on Tuesday, this time regarding the removal of subsidies on petrol. This dispute unfolded amid the devaluation of the naira against the United States dollar in both the official Investors & Exporters Window and the parallel market.
On Tuesday, the official market saw the local currency close at 998/dollar, while the black market recorded a trading rate of 1,225/dollar. Economists and oil marketers argued that the subsidy on Premium Motor Spirit (PMS or petrol) was on the rise as the naira weakened. However, the NNPC contested these claims, asserting that it was recovering the full cost of importing petrol.
During a live televised program, Bismarck Rewane, the CEO of Financial Derivatives Company, clarified that the fuel subsidy had not been entirely removed but reduced. Meanwhile, oil marketers contended that with the depreciation of the naira and the cost of crude oil, petrol should be priced at N1,200 per liter in a free market.
Currently, the NNPCL, the exclusive importer of petrol into Nigeria, sells the commodity for prices ranging from N617/litre to N660/litre, depending on the purchase location within the country. Dr Muda Yusuf, the CEO of the Centre for the Promotion of Private Enterprise, acknowledged a partial subsidy on petrol, attributing it to political, social, and economic considerations by the government.
In response to these positions, the Chief Corporate Communications Officer of NNPCL, Olufemi Soneye, dismissed them as assumptions, maintaining that the Federal Government had ceased subsidizing petrol. President Bola Tinubu, in his inaugural speech on May 29, 2023, declared the end of petrol subsidies, a move swiftly implemented by NNPCL the following day.
Before this declaration, the pump price of petrol was below N190/litre, but it skyrocketed to over N500/litre after the President's statement, further escalating to over N600/litre a few weeks later. When questioned about whether NNPCL subsidized petrol, the oil firm's CCCO emphasized their focus on substantive matters and reiterated that the government did not pay a subsidy on fuel, stating that they recover the full costs from their imported products.
