The rapid depreciation of the Naira is undermining anticipated benefits following the removal of the petrol subsidy by the federal government. Discrepancies emerge as oil marketers and government officials differ on the actual landing cost of Premium Motor Spirit (PMS), also known as petrol, amid Nigeria’s volatile currency.
Currently, the landing cost of PMS averages N1,009 per liter, considering the prevailing exchange rate of N1,500 per dollar, compared to the October 2023 rate of N720 per liter. However, these figures, presented by President of Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, face potential dispute due to additional costs such as insurance, port charges, and vessel hiring.
Reports suggest that the country is incurring approximately N907.5 billion monthly on petrol subsidies, indicating a return to a subsidy regime. Yet, an inside source at the Nigerian National Petroleum Company Limited (NNPCL) denies this assertion, emphasizing the company’s responsibility for ensuring energy security under the Petroleum Industry Act (PIA).
The CEO of NNPC Limited, Mele Kyari, had previously stated a monthly spending of over N400 billion on petrol subsidy, but the surge in landing costs, attributed to the exchange rate, challenges the envisioned savings from subsidy removal. Dr. Muda Yusuf of the Center For The Promotion Of Private Enterprises notes that currency depreciation has eroded subsidy savings, compounded by inflationary pressures.
Despite concerns of a return to a full subsidy, the government emphasizes its commitment to subsidy removal, citing economic reforms for long-term energy security and prosperity. However, PETROAN proposes tapping into the country’s vast gas deposits as an alternative solution to the petrol dilemma. With ongoing efforts to convert filling stations into gas dispensing outlets, this initiative aims to reduce petrol dependence and alleviate foreign exchange constraints.
Oil marketers, represented by the Depot and Petroleum Marketers Association of Nigeria, pledge support for Autogas adoption, donating CNG buses and contributing to President Bola Tinubu’s plan to allocate N100 billion for 3,000 CNG-powered buses by March 2024. These initiatives signal a shift towards reducing reliance on traditional petrol-based fuels and exploring sustainable energy alternatives.
The Minister of State Petroleum Resources (Oil), Sen Heineken Lokpobiri, urges the summit to explore strategies that have brought economic prosperity to other oil-producing countries. He emphasizes the need for environmentally friendly and sustainable exploration of resources to guarantee energy security in Nigeria.
