March 29, 2023

Why petrol subsidy must be removed — PENGASSAN

…says move’ll improve Forex

…Tasks FG on fixing local refineries

By Obas Esiedesa, and Ezra Ukanwa, Abuja.

The PETROLEUM and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, has advised the incoming administration to, as a matter of urgency, remove the petrol subsidy as part of efforts to facilitate the growth of the downstream sector of the oil and gas industry.

The call was made by PENGASSAN President, Comrade Festus Osifo, at the National
Executive Council, NEC, meeting of the Association, held on Tuesday, in Abuja.

Osifo, stating that past administrations’ commitments to retaining subsidies in the country have adversely affected the cost of living and the economy at large, also said that subsidy has shrunk the country’s dollar reserve and further frustrated the exchange market.

While maintaining its stand on the removal of subsidies, he advised that the move would help the country save more and speed up infrastructural development across the country.

The PENGASSAN boss expressed the belief that the removal subsidy will have a positive impact on the nation’s foreign exchange which would in turn rub off positively on the citizens.

According to him, the issue of subsidy, if removed, we believe that the downstream sector of the oil and gas industry will actually grow much more if that sector is deregulated.

“And in the last seven years, we have actually maintained that stand. We have maintained our stance not minding some of the side effects. But again, if you look at these subsidy attacks we tend to be trying to hold on to something why we are losing in some other areas.

“If you look at the cost of living, it has gone up drastically, by over and over, three times in the last two, or three years. If you look at the drivers of why the cost of living has actually moved to where it is today, it is actually because of the fact that our exchange rate has plummeted. Before now, our exchange rate used to be somewhere around 100 plus Naira to $1. But, today, it’s around 800. It even moved beyond it to 800 sometime last year.

“So, now, why is this exchange moving up? Because we are not earning foreign exchange. Oil and gas is where we earn about 80 to 90% of our foreign exchange. But, at the end of the day, this money is now being used for a subsidy, and importing PMS and when you now import this PMS what will now happen in return you will sell in Naira? So, that has a shrinking dollar reserve and because our dollar reserve has shrunk to the level it is today.

“That is actually why our exchange rate has plummeted. If we address this problem, if we look at domestic refining, and we also look at the issues bothering subsidy, if we address this, Nigerian and the Nigerian government will earn more money from the crude oil and that money will go into CBN; it will shore up our reserves and it will support lots of other imports and reduce the pressure in USD”.

He disclosed that the level of work going on in Port Harcourt refinery is unprecedented, adding that before, “turnarounds maintenance was only read on the pages of newspapers but now I can Confirm to you that it is commendable”.

While empathizing with Nigerians on the hardship currently faced with the scarcity and drastic hike in the price of PMS across the country, he called on the management of Nigerian Midstream and Downstream Petroleum, NMDPRA, to compel all marketers and retailers to make the products available at approved prices.

“The national leadership of PENGASSAN has been following up with our members in NNPC Trading Limited who are responsible for assigning the products to marketers and our teaming members from NMDPRA in various depots and terminals across the country that are responsible for issuing cargo clearance, tracking compliance, route inspection, metering calibration/maintenance, accurate delivery to trucks, record keeping, etc. on the need to carry out their functions expeditiously.

“We have called on the management of NMDPRA to compel all marketers and retailers to make the products available at approved prices. They should immediately mobilize all their staff in various locations across the country to track compliance, and anyone found wanting should have their license immediately revoked. We will keep a close tab on this.

“Our Association re-states the commitments to continue its advocacy on the need to fix the Nation’s refineries and with the inclusion of PENGASSAN in the Steering Committee as set up by Nigerian National Petroleum Corporation (NNPC), it shall continue the agitation for the rehabilitation of the four Refineries through engagement with other relevant stakeholders.

“Functional local refineries will not only increase the nation’s revenue base, they will also provide more job opportunities for our youths as well as end the uncertainties in subsidy regimes and product importation.

“While maintaining our support for the full deregulation of the sector and acknowledging the significant milestones achieved in this regard, we counsel that efforts be made to increase the pace of the current refineries rehabilitation and get them back on stream in no time” he added.