Since May 31, 2023, when the program was formally put into effect, the Federal Government has already saved nearly N400 billion as a result of the elimination of the subsidy on Premium Motor Spirit, also known as gasoline, oil marketers reported on Thursday.
Additionally, the oil traders predicted that the price of gasoline will likely increase in July given the Federal Government’s recent decision to allow the naira to float against the US dollar.
On June 14, 2023, the Central Bank of Nigeria combined the nation’s exchange rates into the window for investors and exporters, allowing market forces to determine the exchange rate.
“Right now they (the government) are making money. At least with this removal of subsidy, the government has racked in hundreds of billions, whether in naira or dollar. This is because every month we know how much they lose before,” the National President, Independent Petroleum Marketers Association of Nigeria, Chinedu Okonkwo, stated.
Okonkwo, citing statements made by the NNPCL’s Group Chief Executive Officer, Mele Kyari, during a meeting with oil sector players in February, informed our reporter that marketers had been informed of the amount of money the NNPCL spent on subsidies on a monthly basis.
“Today, by law and the provisions of the Appropriation Act, there is a subsidy on the supply of petroleum products, particularly imports of PMS into our country,” Kyari had remarked during the meeting. Three days ago, the landing cost was approximately N315 per litre in terms of current data.
“Our customers are here; we are transferring to each of them at N113/litre. That means there is a difference of close to N202 for every litre of PMS we import into this country. In computation, N202 multiplied by 66.5 million litres, multiplied by 30 will give you over N400bn of subsidy every month.”
Okonkwo mentioned that oil dealers were having discussions concerning independent marketers importing gasoline.
“We are holding meetings with a lot of people who are interested in commencing PMS imports. We are not resting on our oars about this,” the IPMAN president stated.
Okonkwo maintained that the elimination of the subsidy would not just result in a constant rise in the price of PMS, even if he conceded that the price of gasoline would rise in reaction to changes in foreign exchange rates.
“When there is deregulation and no subsidy, the price of petrol would either go up or come down. If you want to profit, those who bring in and sell at cheaper rates would put you out of business.
“So the market fundamentals will determine the pricing and capping. Therefore the floating of the naira at this time that Nigeria is beginning to make savings is not going to be a fixed thing,” he stated.
“The exchange rate will also fluctuate depending on how we manage our crude oil, which is our foreign exchange earner,” the IPMAN president continued. The naira will start to firm up by the time we start to meet our OPEC quota and other areas of earning foreign money.
“And this will result in cheaper fuel. So we should not be thinking that the cost of fuel will continue to rise. The floating of the naira is good because at the previous level, you only access the dollar at the official rate based on who you know.”
“So long as the exchange rate is high, the cost of petrol will be high. But these are early days and the expectation with the President Bola Tinubu-led government is that the exchange rate will be getting lower. So we will get there,” he stated.
“PETROAN is already working on the import licence approval for petrol, because it has to be approved before you can import,” he stated in reference to plans by his group to begin importing gasoline. While we continue to discuss the process of getting the refineries up and running with the government, we are taking these actions.
Labour speaks
Following the elimination of the subsidy on Premium Motor Spirit, which has continued to put a strain on Nigerians, organized labor has urged the population to be patient while it engages in negotiations with federal government representatives.
According to The Spectator, the cost of living has increased since the PMS subsidy was eliminated, with oil marketers predicting that by July 2023, fuel will cost N700 per liter.
Tommy Etim, the National Vice-President of the Trade Union Congress and a representative of organized labor dealing with the government, said in an interview with our correspondent on Thursday that labor unions were constantly interacting with the government to make sure that beneficial palliatives were provided to Nigerians.
“ Nigeria has come of age and whatever happens Nigerians, especially workers, should exercise patience until the outcome of the meetings so that we can arrive at a collective bargaining agreement that will be for the interest of Nigerians and Nigerian workers.
“Whatever we are facing now is a collective sacrifice and there is hope that we will not allow the pressure for those who have eaten fat on the so-called subsidy to frustrate our negotiations. Let Nigerians see whatever is happening as a collective sacrifice that all Nigerians will be happy.”
