In a renewed clash, the Nigerian National Petroleum Company Limited (NNPCL) and fuel marketers, represented by the Independent Petroleum Marketers Association of Nigeria, find themselves at odds over the Fuel Subsidy Dispute. The confrontation comes amidst the devaluation of the naira against the United States dollar in both the official Investors & Exporters Window and the parallel market.
As the naira closed at 998/dollar in the official market and 1,225/dollar in the black market, economists and oil marketers argue that the subsidy on Premium Motor Spirit (PMS) has been increasing due to the depreciating naira Fuel Subsidy Dispute. However, NNPC contends that it is recovering its full importation cost, countering claims of a growing subsidy.
The Chief Executive Officer of Financial Derivatives Company, Bismarck Rewane, clarified during a live television program that the fuel subsidy was not entirely removed but reduced. Oil marketers suggested that, given the naira’s fall and crude oil costs, PMS should be priced around N1,200/litre in a free market. Presently, the NNPCL, Nigeria’s sole petrol importer, sells petrol at N617 to N660/litre.
Despite these debates, the Chief Corporate Communications Officer of NNPCL, Olufemi Soneye, dismissed economists’ and marketers’ positions as assumptions. President Bola Tinubu, in May 2023, declared the removal of petrol subsidy, resulting in a significant jump in petrol prices.
While the government insists on the subsidy’s removal, some experts, including Rewane and the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu, argue for a partial subsidy due to economic, social, and political considerations.
Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, stressed the need for a balanced approach, asserting that a complete removal of subsidy might exacerbate economic hardships. The World Bank, in December, affirmed that subsidy on petrol persisted, advocating a minimum price of N750/litre without subsidy.
The naira’s continuous depreciation against the dollar, losing about 55% of its value in 2023, adds to the economic challenges. The World Bank recommends increased FX supply and clarity on the Central Bank of Nigeria’s net reserve position to stabilize the naira.
Meanwhile, the NNPC reports 112 cases of crude oil theft in the Niger Delta within a week, exacerbating Nigeria’s struggle against oil theft and its impact on meeting OPEC production quotas. The nation faces significant economic challenges, and the resolution of the fuel subsidy debate remains critical to its economic recovery.
For more news visit https://arritoneconsult.com.ng/blog
For more educational post visit examhood.com.ng