Fuel Price Hasn’t Increased Because FG Has Quietly Started Paying For Subsidy — Fuel Marketers

Fuel Marketers have said the Federal Government has quietly retuMarketersiubsidising the pump price of Premium Motor Spirit, popularly called petrol, hence they should come out clean on its stand on fuel subsidy removal.

According to them, it is only because of a quiet return of fuel subsidy that has not caused the cost of petrol to surge in the last few weeks, considering the rise in the depreciation of the naira against the United States dollar, and the hike in crude oil prices on the international market.

While marketers fear that the amount being quietly spent as subsidy on petrol by the federal government is gradually mounting high due to current crude oil prices, they have asked the government to come clean on it.

On Sunday, Brent crude, the global benchmark for oil, rose to $94/barrel, the highest since the start of 2023.

This development, and the depreciation of the naira, according to industry players, are key indicators that prices should have increased from their current price of N617/litre.

Oil had started the year at about $82/barrel, dipped to $70/barrel in June, but traded above $92/barrel in the past week; on the other hand, the naira weakened to N950/dollar on Thursday, indicating a further worse forex crisis.

Although the Federal Government and its Nigerian National Petroleum Company Limited (NNPCL) had insisted that subsidy on petrol had ended, following the deregulation of the downstream oil sector, operators insisted on Sunday that the government was implementing quasi-subsidy.

They further explained that in July when the cost of petrol was raised to N617/litre, crude oil traded around $82/barrel, while the exchange rate was not as high as N950/$ at the parallel market.

Recall that President Bola Ahmed Tinubu’s Special Adviser on Media and Publicity, Ajuri Ngelale, had told State House correspondents in August that his principal instructed that the cost of petrol should not be increased.

He said, “Mr President wishes to assure Nigerians following the announcement by the NNPC limited that there will be no increase in the pump price of PMS anywhere in the country. We repeat, the President affirms that there will be no increase in the pump price of PMS.”

Also, the NNPCL had similarly said, “NNPCL Dear esteemed customers, we at NNPC Retail value your patronage, and we do not have the intention to increase our PMS pump prices as widely speculated. Please buy the best quality products at the most affordable prices at our NNPC Retail stations nationwide.”

John Kekeocha, National Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), however asked the Federal Government to come out clean with respect to fuel subsidy, instead of mandating oil marketers not to dispense the product above a stipulated band.

He maintained that the decision of the government to put a cap on petrol prices meant that subsidy on petrol had been reinstated.

“The government is not being very transparent with this issue. When you say you have removed fuel subsidy, you don’t come again and moderate prices. Is like speaking with the two sides of the mouth.

“Removal of subsidy means you have removed your hands, and the prices have to follow demand and supply. So if the NNPC says it is getting forex (foreign exchange) to import products and reduce prices for marketers, are they going to do the same for other importers? Remember the government gave import licenses to about seven marketers?

“Are they still going to moderate prices for those people when they bring in the products? No! You don’t blow hot and cold at the same time. There is no way they can bring in products and reduce the price and peg it for marketers to sell at a certain level; it means they are indirectly bringing back subsidy.

“If they want to bring back subsidy, let them say it openly, that ‘we are going to come back to subsidy because of the pains the country generally is going through.’ This is because the initial things they are supposed to do, they did not do it. We have always been clamouring, let the refineries work,” Kekeocha said.

Also, the National Public Relations Officer of IPMAN, Chinedu Ukadike, said the federal government is running a quasi-deregulation, which has both positive and negative sides.

The IPMAN official explained that although the rise in crude oil price would increase Nigeria’s foreign exchange earnings, the forex was being used to import refined products.

He submitted, “So in this price deregulation regime, once the dollar increases, automatically it means that the cost of importing petroleum products will also increase. And the cost of every other related service will rise.

“So the fuel we are buying today at N617 or N596, depending on where you buy it and based on the nearness to depots, is actually below what the price should really be, going by the rise in the dollar and crude oil price.

“I said earlier that what we are experiencing now is quasi-deregulation. The rise in crude oil prices has both positive and negative effects on Nigeria. It is positive because it increases our generation of dollars when we sell the crude.

“But it is negative in the sense that we still use that dollar that we have got to import the finished products of crude. That is the problem. For if Nigeria is refining products, then there will be a windfall, but since we import with the dollar that we make, then it makes no sense.”

Speaking further about how the cost of the quiet subsidy is gradually surging, Ukadike said, “The gap is becoming too much. Also, the exchange rate gap between the official and parallel markets is widening. And these gaps have to be filled by the government through quasi-subsidy on petrol.

“You also know that most of the investors who tried to import products when it was announced that the subsidy on petrol had been removed are now finding it very difficult to do so.

“This is because after buying the dollar in the parallel market, they cannot recoup what they have invested. So the government must be transparent with this subsidy removal thing. It should apply it to the fullest, so that competition can set it.”

Billy Gillis-Harry, the President of the Petroleum Products Retail Outlets Owners Association of Nigeria, said though the cost of crude had been rising lately, the NNPCL should be able to manage it for the benefit of Nigerians, with respect to petroleum products prices.

He told the platform that “Crude oil is selling at a higher price, and that price should impact positively because the major importer of petroleum products is the NNPC, and they do that on a swap basis unless they are telling us that the swap is not efficient.

“For if it is efficient, they should have more money for the size of crude oil they sell, which should impact on the price they pass on to Nigerians. Yes, today, it is a commercial company, but it is still owned by Nigerians and is a sovereign company.

“And the fact that Nigerians must benefit from their natural endowment

God should be reflected in the pricing of products by NNPC. That is all I’ll say about this issue.”

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