The sharp decline in the value of the Naira has created significant challenges within Nigeria’s petroleum supply chain, undermining the anticipated benefits following the federal government’s removal of the petrol subsidy regime. Discord between oil marketers and government officials further complicates matters, particularly regarding the actual landing cost of Petroleum Motor Spirit (PMS) and the impact of currency fluctuations on product importation,leadership reports.
Currently, the estimated landing cost of Premium Motor Spirit (PMS), commonly known as petrol, stands at an average of N1,009 per litre, based on the prevailing exchange rate of N1,500 per dollar, a stark increase from the N720 per litre recorded in October 2023. However, these figures remain subject to dispute due to additional expenses such as insurance, port charges, and vessel hiring costs, as noted by Billy Gillis-Harry, President of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN).
Reports indicate that Nigeria is incurring approximately N907.5 billion in monthly petrol subsidies due to the country’s foreign exchange challenges, pushing the actual fuel cost per litre to N1,203, hinting at a resurgence of the subsidy regime. Nonetheless, sources within the Nigerian National Petroleum Company Limited (NNPCL) deny these claims, asserting that subsidies have ceased.
ALSO READ: Daurawa’s Resignation Stirs Controversy Over Kano’s War Against Immorality
Clarifying the situation, an NNPCL insider points to the provisions of the Petroleum Industry Act (PIA), emphasizing the company’s responsibility for ensuring energy security despite operating as a limited liability entity. Despite earlier estimates suggesting a monthly subsidy expenditure of over N400 billion, investigations reveal a notable surge in petrol’s landing cost attributed to currency depreciation.
Dr. Muda Yusuf, CEO of the Center For The Promotion Of Private Enterprises (CPPE), highlights the impact of currency depreciation on eroding subsidy savings, compounded by mounting inflationary pressures. He underscores the importance of recognizing citizens’ hardships amid these economic challenges.
Despite concerns raised by the International Monetary Fund (IMF) regarding the alleged resumption of petrol subsidies, the Nigerian government maintains its commitment to subsidy removal, citing reductions in petrol imports and positive economic indicators.
President Bola Tinubu’s administration emphasizes long-term energy security and economic prosperity through subsidy removal, advocating for transparent and accountable energy sector practices. Efforts to explore Nigeria’s abundant gas reserves and promote Autogas adoption represent potential solutions to alleviate petrol dependency and mitigate economic strains.
Collaborative initiatives between PETROAN, oil marketers, and government agencies aim to facilitate Autogas adoption, with plans for conversion centers and vehicle conversions supported by government funding. These endeavors signify a significant step towards reducing reliance on traditional petrol-based fuels and ensuring energy security.
In parallel, stakeholders recognize the need for environmentally friendly and sustainable energy exploration practices to unlock Nigeria’s full energy potential and promote economic prosperity.
As Nigeria seeks to address its energy challenges, increased production and strategic investments are deemed essential to guaranteeing energy security and fostering economic growth.
