Lagos — The Independent Petroleum Marketers Association of Nigeria, lPMAN, says subsidy on Premium Motor Spirit, popularly known as petrol, kills efficiency in the procurement and supply chain of the fuel petrol business and deprives government of huge revenue.
The National Operations Controller of IPMAN, Mr Mike Osatuyi, who stated this, was speaking in the backdrop of the current increase in the pump price of petrol in filling stations across the country.
According to the News Agency of Nigeria, Osatuyi, in an interview in Lagos condemned payment of subsidy on petrol, saying it was no longer sustainable.
“Subsidy kills efficiency in the procurement and supply chain of petrol business operations and deprives government of huge revenue,” he said.
According to him, petrol subsidy could have benefitted Nigerians, but half of assumed consumption found its way to neighbouring countries where Nigeria’s petrol was cheaper at landing cost compared to those countries.
The marketer urged the government to put all necessary palliatives in place to cushion the negative effects of the imminent increase in price of petrol before removing subsidy.
“Nigeria’s debt servicing of N6.3 trillion per year is not healthy for the country with mere capital expenditure of N5.35 trillion.
“2023 budget projected crude oil production of 1.69 million per day, which is achievable in view of pragramatic measures taken by the government for pipeline surveillance and zero tolerance to crude oil theft,” he said.
Osatuyi said the Group Chief Executive of NNPC Limited, Malam Mele Kyari confirmed that the cost of petrol was around N510 per litre without subsidy and added that if the Central Bank of Nigeria, CBN, made forex available at official rate to the importers at N445 to a dollar, pump price of 510 per litre was achievable.
He explained: “As at October 2022 exchange rate of naira to dollar stood at 445 naira againt 435 projected in 2023 budget.
“If CBN failed to avail marketers forex at official rate of N445 to a dollar after deregulation, importers will have no choice than to turn to the black market for forex, which will push up the pump price of petrol to between 650 naira to 700 naira per litre.”.
The IPMAN officer said total deregulation of the downstream sector of the petroleum industry remained the solution to fuel scarcity.
According to him, deregulation remains the answer to all challenges confronting the downstream sector and also allows all the players to key into the sector and import freely.
“Total deregulation remains the best solution to ending fuel scarcity. The deregulation of the downstream sector remains the only potent and lasting solution to scarcity.
“But the cost implication of the policy will make the price of petrol too expensive for Nigerians, as deregulation will shift the burden from the government to users of the product,” Osatuyi said.
