The Organized Private Sector (OPS) together with fuel marketers and economists have appealed to the federal government to release the regulation of the price of petroleum products to market forces. Only retail petrol stations owned by the Nigerian National Petroleum Company (NNPC) Limited and few member marketers of the Major Oil Marketers Association of Nigeria (MOMAN) sell fuel at the rate of N165 to N170, while other retail stations belonging to member marketers of the Independent Petroleum Products Marketers Association of Nigeria (IPMAN) sell above the regulated prices – between N250 and N400 per litre.
According to research, it was discovered that petrol is more expensive in the South-east and South-south, compared to the South-west states. This is because of the high cost of getting vessels for transporting the product from the high sea to the eastern zone of Calabar and Port Harcourt. This development has caused an argument of the unsustainability of trillions of naira on petrol subsidy due to unavailability of the product in many petrol stations among petrol marketers.
Marketers opine diversion of subsidy budgets to refineries fixation.
At an interview, the Executive Secretary of the Major Oil Marketers Association of Nigeria (MOMAN), Mr. Clement Isong and the National President of the Petroleum Products Outlets Owners Association of Nigeria (PETROAN), Dr. Billy Grills-Harry, stated that the federal government should urgently push abolishment of subsidy regime and reallocation of the projected N6 trillion for petrol subsidy in 2023 to other significant sectors. They suggested that the subsidy budgets be diverted to fix the country’s refineries, purchase gas-fired mass transit buses to improve alternative energy and introduce subsidy to accelerate food production for reduction of food costs.
Furthermore, marketers projected the actual market price of petrol to be between N450 and N500 per litre, while appealing to the monetary authorities to ensure availability of foreign exchange to all marketers for enablement of all marketers to import petrol. Contrary to the provisions of the Petroleum Industry Act (PIA), which endorsed full deregulation of the downstream petroleum sector, the federal government, in January 2022, postponed elision of petrol subsidy to June 2023, this year.
Nigerians pay between N300 and N650 for one litre of petrol.
According to Isong, MOMAN members were having difficulties with conveying products to retail stations as there were challenges with supplying and selling petrol at the government’s price and forcing NNPC to do it. As a result, marketers who are ready to take vessels to the high seas for collection of the product from the NNPC and convey to depots in the east in Port Harcourt do it at higher costs which gets transferred to IPMAN and eventually to the customer.
Therefore, members of the Organized Private Sector of Nigeria (OPSN), economists and financial experts have appealed to the federal government to take drastic steps for official termination of the policy of subsidizing the price of petrol before June 2023. They suggested removal of the subsidy in phases and to ensure renewal of the four petrol refineries in the country. NECA boss, Oyerinde, asserted that the present situation where Nigerians pay between N300 and N650 per litre for a product that is supposed to be subsidized and sold at N165 has weakened the argument for subsidy.
Petrol subsidy is considered massive corruption.
Oyerinde affirmed that the huge amount spent on subsidy is indirectly used to subsidize inefficiency, consumption and corruption. A professor of Economics, Akpan, said that the local refineries need to start functioning before the decision of the existence of a subsidy can be made. He also regarded subsidy as perhaps massive corruption. He advised that the removal of subsidy can begin when the market price of petrol is determined and production for domestic use has begun by local refineries.