NNPCL, Marketers Clash Over Petrol Subsidy as Prices Surge to N1,200/Litre

The Nigerian National Petroleum Company Limited (NNPCL) and fuel marketers, represented by the Independent Petroleum Marketers Association of Nigeria, found themselves at odds over the removal of subsidy on petrol. This clash follows the depreciation of the naira against the United States dollar, closing at 998/dollar in the official market and 1,225/dollar in the parallel market on Tuesday.

Economists and oil marketers argue that the subsidy on Premium Motor Spirit (PMS) has been increasing due to the weakening naira, but the NNPC disputes this, emphasizing that it is recovering full costs on petrol importation. Financial experts, like Bismarck Rewane, assert that while subsidy was reduced, it was not entirely removed.

Oil marketers contend that considering the naira’s decline and crude oil costs, PMS should be priced at N1,200/litre in a free market. Presently, petrol, solely imported by the NNPCL, sells between N617/litre to N660/litre, varying by location in Nigeria.

The Chief Corporate Communications Officer of NNPCL, Olufemi Soneye, dismisses claims of subsidy, stating the Federal Government has ceased subsidizing petrol. This assertion aligns with President Bola Tinubu’s declaration in May 2023, leading to a drastic surge in petrol prices.

Meanwhile, Chief Ukadike Chinedu, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, forecasts that subsidy on petrol is rising, suggesting a market-driven price of N1,200/litre. Chinedu anticipates a reduction in prices with the imminent operation of the Port Harcourt and Dangote refineries.

Dr Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, acknowledges partial subsidy on petrol, citing social, economic, and political reasons for its retention. He stresses the government’s need to balance economic gains with potential social and political consequences.

As the debate rages on, the World Bank insists that subsidy on petrol persists, emphasizing that the cost of PMS should not fall below N750/litre without subsidy.

Amidst these discussions, the naira continues its decline, closing at N988.46/$ on the Investors and Exporters Window. Analysts attribute the naira’s poor performance in 2023 to unsettled forwards, undelivered promises of dollar inflows, and a peak in inflation.

Additionally, the NNPC reports an alarming surge in crude oil theft in the Niger Delta, recording 112 cases in one week, further complicating Nigeria’s economic challenges. The company vows to intensify efforts against oil theft, a menace costing the country billions and hindering OPEC-approved production quotas.