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Fresh controversies have emerged over the return of fuel subsidy into the Nigerian oil industry as key insiders have claimed that the country has returned to the subsidy regime amid strong denials by the federal government.
The Matrix reports that upon assumption of office on May 29, 2023, President Bola Ahmed Tinubu had announced that the subsidy regime was gone sparking an almost 300 % increase in the pump price of petrol.
However, reports of the reinstatement of fuel subsidy have been making the rounds and has been a contentious topic in public discourse, with several observers maintaining that the federal government has restarted the subsidy on petrol.
And yesterday, a key industry player and the Chief Executive Officer CEO of Rainoil Limited, Gabriel Ogbechie blew the lid on the secrecy by disclosing that indeed, the federal government has resumed the payment of the controversial fuel subsidy following the devaluation of the Naira in the foreign exchange market.
Ogbechie blew the lid on Tuesday during the Stanbic IBTC Energy and Infrastructure Breakfast Session held in Lagos.
He pointed out that with Nigeria’s daily fuel usage at 40 million liters and the foreign exchange rate at N1,300, the government’s subsidy per liter of fuel falls between N400 and N500, culminating in a monthly total of approximately N600 billion.
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“When Mr. President came in May last year, one of the things he said was that Subsidy is gone. And truly, subsidy was gone because immediately the price of fuel moved from 200 to 500 per liter. At that point truly, the subsidy was gone.
“During that period, the Dollar was exchanging for N460, but a few weeks later, the government devalued the exchange rate. And the Dollar moved to about N750. At that point, subsidy was beginning to come back.
“The moment the two markets officially closed, the market went to about N1,300. At that point, that conversation was out of the window. Subsidy was fully back on petrol. If you want to know where petrol should be, just look at where diesel is. Diesel is about N1,300 and petrol is still selling for N600.
“So, I can tell you for free that there is at least N400 or N500 liters subsidy on petrol today. If you look at our daily consumption, say 40 million liters, and we’re spending N500 per liter, that is about N20 billion every day, N600 billion every month and 7.2 trillion yearly depending on how we look at it. So, subsidy is definitely back on petrol,” he said.
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Furthermore, he said that NNPC being the only petrol importer in the country implies that there is an ongoing subsidy, as prices had to be fixed.
“And if you look at it, NNPC remains the sole importer of petrol in this country because there is subsidy on petrol so the price has to be pegged,” he added.
Earlier yesterday, the former governor of Kaduna State, Nasir El Rufai, had also said the federal government is spending more on petrol subsidy than before.
Speaking with newsmen after delivering the lead paper at a capacity-building workshop on Enhancing Skills of Government Officials in Policy Implementation and Productive Human Resource Management for political appointees in Maiduguri on Monday, he claimed that the FG was now subsidizing fuel.
Hear him; “The federal government is now subsidizing fuel; many people don’t know this.”
Applauding the policy, El-Rufai added, “It is a right policy. I have always supported the withdrawal of oil subsidies; but in the course of implementing the policy, the government realised that subsidy has to be back; right now, the government is paying a lot of money for subsidy, even more than before.
“You start implementing a policy because you are absolutely sure it is the right policy, but in the course of implementation, you come across bottlenecks, and you modify.
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“The keyword in leadership, in my view, is pragmatism. You should be pragmatic. So when you make a policy, you start implementing it, and it doesn’t seem to work well. You should have the humility to stand back and say this is not working, and you modify it.”
In a seeming admittance of the return of the subsidy regime, the Special Adviser to the President on Energy, Ms. Olu Veŕheijen, has disclosed that the Federal Government reserves the right to pay fuel subsidy intermittently to cushion hardship in the country.
“The subsidy was removed on May 29. However, the government has the prerogative to maintain price stability to address social unrest. They reserve the right to intervene.
“If the government feels that it cannot continue to allow prices to fluctuate due to high inflation and exchange rates, the government reserves the right to intervene intermittently and that does not negate the fact that subsidy has been removed,” she said.
On its part, however, NNPC has insisted that no subsidy is paid to its account from the federal government.
