EXCHANGE RATE

Oil marketers in Nigeria have challenged the federal government’s stance on the purported removal of oil subsidies, casting doubts on official statements. On Tuesday, October 10, these industry stakeholders disputed the government’s assertion that there is no longer a subsidy on fuel in Nigeria.

According to the oil marketers, if there were no subsidies on petroleum products, the current price of Premium Motor Spirit (PMS), commonly known as petrol, should not be less than N800 per liter. However, petrol is presently being sold between N580 and N617 per liter.

The controversy began when Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Corporation (NNPC), denied the reintroduction of petrol subsidies. Kyari claimed that the long queues at petrol stations across the country were due to distribution issues and not a lack of supply. He stated, “No subsidy whatsoever. We are recovering our full cost from the products that we import. We sell to the market, and we understand why the marketers are unable to import. We hope that they do it very quickly, and these are some of the interventions the government is doing. There is no subsidy.”

This statement came after the Petroleum and Natural Gas Senior Staff Association of Nigeria confirmed the return of fuel subsidies. Oil marketers have consistently maintained that fuel subsidies have been reinstated, citing a landing cost of N720 per liter for petrol as of the previous week.

In response to Kyari’s statements, Chief John Kekeocha, the National Secretary of the Independent Petroleum Marketers Association of Nigeria, voiced his skepticism, saying, “I don’t know why the government keeps peddling lies. When they removed the PMS subsidy, a dollar was about N700, and they made us believe that the removal of subsidy would make the supply of products follow the dictates of demand and supply, considering forex as the benchmark. Now, this is just simple arithmetic. If you removed the subsidy when a dollar was about N700 and today the dollar is more than N1,000, and you are still supplying and giving products at almost the same rate, what is the magic? They are subsidizing products as we speak.”

Kekeocha argued that the government removed the subsidy without thorough consideration of the consequences and has now reintroduced it secretly. He expressed concerns about the downstream sector’s viability, warning, “I am telling you that in a very short time there will be no product anywhere in this country, apart from the tank farms that have access to diesel.”

He also pointed out that the cost of diesel has risen significantly, making it challenging for independent marketers to compete with tank farm owners who sell at a lower price, such as N617 per liter. He emphasized that without intervention, the number of functional filling stations across the country is decreasing daily.

Regarding the issue of stabilizing foreign exchange rates, Kekeocha argued that addressing forex is beyond the government’s control, and doing so would require a clear admission of the subsidy’s return. He suggested that the government should have prioritized reviving domestic refineries to reduce the pressure on imports and lower local fuel costs.

Contradicting the NNPC’s claims of sufficient product availability, Kekeocha and other industry insiders painted a grim picture of the fuel situation in Nigeria, with many vehicles unable to find fuel, and filling stations closing. These developments, according to them, provide further evidence that fuel subsidies have been gradually reintroduced.

The ongoing dispute and uncertainty surrounding fuel subsidies have raised concerns about the stability of the Nigerian fuel market and the potential impact on consumers and the economy.