By Udeme Akpan
Marketers and experts, have reacted as it becomes obvious that the nation’s petrol subsidy will hit N3 trillion yearly, based on current market realities.
Speaking during the panel session at the ongoing 15th OTL Africa Downstream Week in Lagos yesterday, the Managing Director, Petroleum Products Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation, Isiyaku Abdullahi, said the annual subsidy on Premium Motor Spirit (petrol), will rise to N3 trillion if the current market realities persist.
“At $80 crude oil, 60 million litres daily consumption and N411/$1 forex, PMS under-recovery per litre will be N138/litre. Daily PMS under-recovery will be N8.3billion. Annual PMS under-recovery will escalate to N3trillion,” he said.
But in an interview with Vanguard, Thursday, the Ghana National Petroleum Corporation (GNPC), Professorial Chair in Oil and Gas Economics and Management, Institute for Oil and Gas Studies, University of Cape Coast, Ghana, Prof. Omowumi Iledare, stated that it does not make sense to fund that level of petrol subsidy.
Specifically, he said: “It does not make economic sense. A lot can be done with N3 trillion to attract maximum benefits to Nigeria and Nigerians.”
Similarly, in another interview with Vanguard, the National President, Oil and Gas Service Providers Association of Nigeria (OGSPAN), Mazi Colman Obasi, said: “How can a country produce crude oil and be importing petroleum products? How can we have poorly maintained refineries and prefer massive petrol importation? Where else do they run the oil industry like that?’’
Continuing, he said: “Cooking gas is supposed to have become common use in every kitchen in Nigeria as of today. But the price of cooking gas has gone beyond the reach of the common people of Nigeria. Nigerians should also be converting to gas in order to reduce the high demand for petrol.”
The Chairman of MOMAN, Mr. Olumide Adeosun, had earlier urged the Federal Government to deregulate the nation’s downstream sector without further delay in line with the provisions of the Petroleum Industry Act (PIA).
Adeosun, who made the call at a virtual press briefing to announce his taking over from his predecessor, Mr. Tunji Oyebanji, had said: “Making the transition to fully competitive pricing oriented downstream sector will require the collective engagement and resolve of all stakeholders. I assure you that MOMAN will continue to be at the forefront in bridging the gap between the government and the private sector in ensuring that Nigeria has a viable energy sector.
“We will continue to sustain the engagement and the creation of initiatives that will make the implementation of this law a shared success for all concerned parties.”
However, speaking at the just-concluded Nigerian Economic Summit in Abuja, the Minister of Finance, Budget and National Planning, Zainab Ahmed, had explained: “In our 2022 budget, we only factored in subsidy for the first half of the year; the second half of the year, we are looking at complete deregulation of the sector, saving foreign exchange and potentially earning more from the oil and gas industry.”
Also speaking at the same event, the Chairman of the Economic Advisory Council (EAC), Doyin Salami, who noted that PIA has already made the subsidy illegal, had said: “With the PIA essentially it makes illegal petrol subsidy and yes, there is a period where NNPC and the new regulatory agencies must calibrate themselves, but at the end of this period, I think it is about six months, which explains why the minister has said for the first half of the year, there is a provision.
“My view will be if we could get it done sooner than that, it will be excellent. It releases money. The key point is, at the end of that conversation, except if we choose not to obey the law. My thought is we will obey the law and subsidy will be gone.”