Despite announcing during his inaugural speech that the subsidy regime is gone, president Bola Ahmed Tinubu-led administration has finally bowed to pressure and returned to the fuel subsidy era.
The return was officially confirmed by the Petroleum and Natural Gas Senior Staff Association of Nigeria—PENGASSAN.
There were reports that the federal government intervened to prevent further rise in pump price, but the government denied this.
According to a report by Daily Trust, the federal government paid N169.4 billion as subsidy in August to keep the pump price at N620 per litre.
A document by the Federal Account Allocation Committee—FAAC showed that in August 2023, the Nigerian Liquefied Natural Gas (NLNG) paid $275m as dividends to Nigeria via NNPC Limited. NNPC Limited used $220m (N169.4 billion at N770/$) out of the $275m to pay for the PMS subsidy. Then NNPC held back $55m, illegally.
But while speaking on Channels Television’s Politics Today, Festus Osifo, National President of PENGASSAN, said due to the cost of crude oil in the international market and the exchange rate, the government still pays subsidies on petrol.
“They [government] are paying subsidy today. In reality today, there is subsidy because as of when the earlier price was determined, the price of crude in the international market was somewhere around $80 for a barrel. But today, it has moved to about $93/94 per barrel for Brent crude. So, because it has moved, then the price [of petroleum] also needed to move,” he said.
Osifo added that before the government can stop subsidising petroleum, two things must happen.
“The only reason the price will not move is when you are able to manage your exchange rate effectively and you are able to pump in supply and bring down the exchange rate.
“So, if the exchange rate comes down today, we will not be paying subsidy. But with the exchange rate value and the price of crude oil in the international market, we have introduced subsidy,” the PENGASSAN boss said.