The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has announced that President Bola Tinubu has reinstated fuel subsidies.
On his first day in office, President Bola Tinubu ordered the withdrawal of fuel subsidies, resulting in an increase in petrol prices from N197 to between N480 and N570; the pump price was later revised upward to N620.
However, there were reports that the price will rise due to volatility in the global oil market.
The federal government was said to have interfered to prevent further increases in pump prices, although the administration disputed this.
However, despite Tinubu’s repeated claims that the subsidy was no longer in effect, the federal government paid N169.4 billion as a subsidy in August to retain the pump price at N620 per litre.
According to a document obtained by our reporter from the Federal Account Allocation Committee (FAAC), the Nigerian Liquefied Natural Gas (NLNG) paid $275 million in dividends to Nigeria through NNPC Limited in August 2023. NNPC Limited utilized $220 million (N169.4 billion at N770 per dollar) of the $275 million to pay for the PMS subsidy. The NNPC then improperly withheld $55 million.
The authorities did not confirm or deny the story.
Festus Osifo, National President of PENGASSAN, said on Channels Television’s Politics Today that the government still pays petrol subsidies due to the cost of crude oil on 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 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.
He said 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.
Daily Trust