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The Federal Government, on Monday, denied reintroducing the subsidy on Premium Motor Spirit, popularly called petrol, amid the closure of many filling stations nationwide due to various challenges in the downstream oil sector.
It also said the pockets of queues observed by motorists in petrol stations across the country stemmed from hiccups in product distribution from the South to the North, not a lack of supply.
This came as the Nigerian National Petroleum Company Limited also declared on Monday that it would have gone bankrupt in June this year had it been the President, Bola Tinubu, did not halt subsidy on PMS in May.
The Group Chief Executive Officer, NNPCL, Mele Kyari, told State House Correspondents after an audience with the President at the Aso Rock Villa that fuel subsidy had not been returned.
“No subsidy whatsoever. We are recovering our full cost from the products that we import. We sell to the market, and we understand why the marketers are unable to import. We hope that they do it very quickly and these are some of the interventions the government is doing. There is no subsidy,” he stated.
Kyari’s assertion came barely 48 hours after the Petroleum and Natural Gas Senior Staff Association of Nigeria confirmed the return of fuel subsidy.
Also, oil marketers had repeatedly stated that fuel subsidy had returned, as they explained that the landing cost of petrol as of last week was N720/litre. The commodity is currently sold at between N580/litre and N617/litre, depending on the area of purchase.
PENGASSAN’s National President, Festus Osifo, had said the government still subsidised petrol due to the cost of crude oil in the international market and the exchange rate.
“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 around $80 for a barrel.
“But today, it has moved to about $93/94 per barrel for Brent crude. So, because it has moved, the price [of petroleum] also needed to move. The only reason the price will not move is when you can manage your exchange rate effectively and you can 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,” Osifo had explained.
In his inaugural address after taking the oath of office on May 29, 2023, Tinubu announced that the Federal Government was closing the curtains over the subsidy era.
noted that previous governments had attempted to remove subsidies on petroleum products until May 29, 2023, when Tinubu announced the end of the scheme.
“There were several attempts to do this in the past, spanning about 20 years, but it didn’t happen because there was a communication gap, by the wrong assumptions that when you take out subsidies, enormous pain will come.
And that was a very difficult historical conversation.
“If there is one thing that stifles growth in the downstream sector of the petroleum industry, it is the existence of subsidies, and that is the reality.
Kyari said people would always cut corners as long as the market was not determining the price of petroleum products, adding that subsidy should have gone since February 2022 based on the provisions of the Petroleum Industry Bill.
The NNPCL boss stated that the National Assembly intervened and requested that the subsidy be sustained until June 30, 2023.
“Obviously, budget is one thing; funding is a different thing. And I can tell you that since 2022, when that provision was made until May 29, 2023, not a single naira was paid to the NNPC Ltd as cost of subsidy. That means we are carrying it entirely on the balance sheet of NNPCL
