The Nigerian government has refuted claims of reinstating the subsidy on Premium Motor Spirit (PMS), commonly known as petrol, amidst the closure of numerous filling stations nationwide due to challenges in the downstream oil sector.
According to government sources, the queues observed at petrol stations are a result of distribution issues from the South to the North rather than a shortage of supply. The Nigerian National Petroleum Company Limited (NNPCL) also stated that if not for President Bola Tinubu’s decision to halt the subsidy on PMS in May, the company would have faced bankruptcy by June this year. Currently, Nigeria imports PMS and other refined petroleum products, but efforts are underway to transform the nation into a net exporter of these products by revamping its refineries.
NNPCL’s Group Chief Executive Officer, Mele Kyari, clarified, “No subsidy whatsoever. We are recovering our full cost from the products that we import. We sell to the market, and we understand why the marketers are unable to import. We hope that they do it very quickly and these are some of the interventions the government is doing. There is no subsidy.”
Kyari’s statement contradicts recent claims by oil marketers who have asserted the return of fuel subsidies, citing rising costs and pricing discrepancies. Festus Osifo, the National President of the Petroleum and Natural Gas Senior Staff Association of Nigeria, explained that subsidy persisted due to international crude oil prices and exchange rate fluctuations. In May 2023, President Tinubu had announced the end of the subsidy era, redirecting the funds toward public infrastructure, education, healthcare, and job creation. This decision led to an increase in fuel prices and further adjustments.
Despite concerns about fuel queues, Kyari assured that supply remained robust, and the deregulation of the downstream sector had fostered market competition, resulting in minor price variations among gas stations. He emphasized that the government was actively addressing forex challenges to support oil marketers. While the closure of filling stations continues due to foreign exchange issues, the NNPCL is confident that with ongoing efforts, Nigeria will become a net exporter of refined petroleum products by 2024. Kyari also noted the potential of Compressed Natural Gas as an alternative to petrol, offering a more cost-effective and cleaner option for consumers.
The removal of the subsidy has been a contentious issue in Nigeria for years, but President Tinubu’s bold decision aims to create a more sustainable and competitive energy sector. Despite the challenges, the government’s commitment to addressing issues related to fuel pricing and supply offers hope for a stable and prosperous future.
Source: [Punch]
