Oil marketers in Nigeria and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) have called for the removal of fuel subsidy.
The groups said the Federal Government should stop the payment of subsidy, which gulped a whooping N60.37 billion in November 2019.
The oil marketers, under the umbrella body, Major Oil Marketers Association of Nigeria (MOMAN) said the Nigerian government should relax control and let the price of petrol be determined by market forces. The association said no matter how long Nigeria distances itself from the decision, it will have to embrace it at some point.
Nairametrics had reported that the Petroleum Product Pricing Regulatory Agency (PPPRA), disclosed that the Nigerian National Petroleum Corporation (NNPC) spent an average of N39.59 subsidizing every litre of petrol imported into the country in November. The NNPC, which is the sole importer of petrol in the country, reported that Nigeria consumes between 55 million and 60 million litres of petrol every day while Punch reported that FG is expected to spend N750.81 billion on petrol subsidy in 2020.
Subsidy payments degrades industry: Clement Isong, the Chief Executive Officer and Executive Secretary, MOMAN, which comprises of Total Nigeria Plc, Forte Oil Plc, OVH Energy Limited (an Oando licensee), MRS Oil Nigeria Plc, Conoil Plc and 11Plc (formerly Mobil Oil Nigeria Plc), subsidy payment degrades operational efficiency and economics of the downstream sector.
“We are consistent in our view that the subsidy payment or subsidy in the petroleum downstream sector degrades operational efficiency and economics of the downstream sector.
“We don’t think it is good for the industry as a whole. The industry is fraught with malpractices throughout the supply chain and needs improved governance and transparency,” Isong said while suggesting deregulation of the industry.
“We think it is only deregulation that can help us clean up the industry and bring back efficiency.”
PENGASSAN’s spokesperson, Fortune Obi, also backed MOMAN’s request, stating that the position of the association remains that subsidy should be removed because the country can’t pay it forever.
Where subsidy payment will be useful: Both associations said the cost of subsidy could be disbursed to finance infrastructure which is in dire need of the capital. Also, while MOMAN said the payment on fuel subsidy could be used to improve the road, PENGASSAN called for the funds to be used on revamping the refineries.
Obi said, “Amount that is to be used for subsidy should be invested in our refineries to give us the quantity of petroleum products we need.” He advised that the government should invite investors and let them operate it as a commercial business.