Africa’s biggest economy is spending N600 billion every month on petrol subsidies, Rainoil Limited CEO has said.
Ogbechie made this statement on Tuesday during the Stanbic IBTC Energy and Infrastructure Breakfast Session held in Lagos.
He pointed out that with Nigeria’s daily fuel usage at 40 million litres and the foreign exchange rate at N1,300, the government’s subsidy per liter of fuel falls between N400 and N500, culminating in a monthly total of approximately N600 billion.
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President Bola Tinubu, in his inauguration speech on May 29, 2023, said the subsidy on petrol “is gone”.
“When the new President came May last year, one of the things he said is that Subsidy is gone. And truly subsidy was gone because immediately the price of fuel moved from 200 to 500 per litre. At that point truly, subsidy was gone.
“During that period, dollar was exchanged for N460, but a few weeks later, the government devalued the exchange rate. And dollar moved to about N750. At that point, subsidy was beginning to come back.
“The moment the two markets officially closed, officially the market went to about N1,300. At that point, that conversation was out of the window. Subsidy was fully back on petrol. If you want to know where petrol should be, just look at where diesel is. Diesel is about N1,300 and petrol is still selling for N600.
“So I can tell you for free that there there is at least N400 or N500 liters subsidy on petrol today. If you look at our daily consumption, say 40 million liters, and we’re spending N500 per liter, that is about N20 billion every day, N600 billion every month and 7.2 trillion yearly depending on how we look at it. So, subsidy is definitely back on petrol,” he said.
Furthermore, he said that “NNPC being the only petrol importer in the country implies that there is an ongoing subsidy, as prices had to be fixed”.
“And if you look at it, NNPC remains the sole importer of petrol in this country because there is subsidy on petrol so the price has to be pegged,” he added.
On Monday, Nasir el-Rufai, former governor of Kaduna state, said the federal government is spending more on petrol subsidy than before.
speaking with journalists after delivering the lead paper at a capacity-building workshop, in Maiduguri on Monday, el-Rufai said the government has started paying petrol subsidy.
“The federal government is now subsidizing fuel; many people don’t know this,” el-Rufai said.
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“It is a right policy. I have always supported the withdrawal of oil subsidy; but in the course of implementing the policy, the government realised that subsidy has to be back; right now, government is spending a lot of money for subsidy, even more than before.
“You start implementing a policy because you are absolutely sure it is the right policy, but in the course of implementation, you come across bottlenecks, and you modify.
“The keyword in leadership, in my view, is pragmatism. You should be pragmatic. So when you make a policy, you start implementing it, and it doesn’t seem to work well. You should have the humility to stand back and say this is not working, and you modify it.”
