The federal government is currently grappling with the challenge of stabilizing the pump price of premium motor spirit (PMS) following the removal of subsidies on May 29, 2023. This removal triggered a surge in prices due to market dynamics, the depreciation of the naira, and the increasing cost of crude oil on the global market.
The cost at the petrol pump has undergone two significant increases since the subsidy was eliminated, surging from N185 to well over N500 in May, and subsequently reaching N617 in July. These price hikes have resulted in a pressing cost-of-living crisis across Nigeria.
In a related development, the Kenyan government, in response to public outcry, temporarily reinstated a subsidy that had been removed, aiming to stabilize retail fuel prices for the next 30 days.
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Addressing the situation, President Bola Tinubu recently offered reassurance that the government is devising strategies to maintain the current PMS pump price within the country. He underscored that there are no plans for price hikes across different regions.
However, President Tinubu also confirmed that the country would not reverse its stance on subsidy removal.
Presidential spokesperson Ajuri Ngelale communicated this information to State House correspondents, asserting the official standpoint that there will be no immediate price escalation.
He highlighted that the President’s conviction is grounded in the belief that the existing pricing structure can be sustained while addressing inefficiencies within the midstream and downstream petroleum sector, without reversing the deregulation policy.
The President further expressed that the threat of an unforeseen strike by organized labor was untimely given the ongoing developments.
Ngelale emphasized the President’s determination to maintain competitive balance, preventing monopolization within the sector. The government’s focus also lies on addressing inefficiencies in the midstream and downstream petroleum value chains to stabilize prices.
He argued that, when compared to other West African nations, the cost of petrol remains notably lower in Nigeria.
Ngelale conveyed, “Mr. President wishes to assure Nigerians following the announcement by the NNPC Limited just yesterday that there will be no increase in the pump price of petroleum motor spirit anywhere in the country.”
Additionally, he presented a graphical comparison of PMS prices between Nigeria and other West African countries, indicating that Nigeria’s pricing is still relatively affordable.
While PMS consumption in Nigeria has decreased from 67 million liters per day to 46 million liters per day, the nation is not yet out of the challenges it faces. Ngelale called for patience from citizens, assuring them of the Tinubu administration’s transparency in addressing fuel-related matters.
Furthermore, Ngelale promised that the government would share insights into the issues around foreign exchange illiquidity, revealing the impacts of Central Bank mismanagement over preceding years.
In a separate development, the Kenyan government’s decision to temporarily reinstate a small subsidy aims to stabilize retail fuel prices for 30 days, reversing a prior policy change driven by public concern over high living costs.
In Nigeria, analysts speculate that the Nigerian National Petroleum Company Limited’s announcement of no intentions to raise petrol prices hints at the possibility of the federal government re-introducing a form of subsidy, although this has not been officially confirmed.
This potential move is aimed at curbing the escalating pump prices that have adversely affected the general population. The source emphasized that given the lack of control over international crude oil prices, which significantly influence the cost of refined imports, such action may be the only available option.
The CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, commented that maintaining the current price might be the course of action taken regardless of fluctuations in international oil prices, considering the severe strain citizens are already experiencing.
Another reliable source indicated that the possibility of a return to a subsidy regime is being considered as a means to alleviate the burden of rising pump prices on the cost of living.
Earlier, the Nigerian National Petroleum Company Limited (NNPCL) responded to reports speculating an increase in petrol pump prices by asserting that it has no plans to raise retail fuel prices. The NNPCL initiated pump price adjustments in May as part of the removal of petroleum subsidies, allowing market forces to determine prices.
In Nigeria, the parallel market’s exchange rate, which reached an all-time high of N950, has also experienced significant fluctuations.
It is important to note that the evolving situation requires continuous monitoring, as government actions and policies may adapt in response to changing circumstances.
