Controversy trails alleged secret payment of subsidies
…NNPCL insists gov’t has ceased paying subsidies
…FX shortage stalls importation of fuel, as NNPC now sole petrol importer
…As Isreali crisis fuels surge of oil prices
Controversies have trailed the suspension of the payment of subsidy on Premium motor spirit (PMS) popularly called Petrol by Nigeria’s Federal government.
President Bola Ahmed Tinubu had in May announced an end of fuel subsidy in Nigeria while delivering his inauguration speech at the Eagle Square yesterday.
According to him, “We commend the decision of the outgoing administration in phasing out the petrol subsidy regime which has increasingly favoured the rich more than the poor. Subsidy can no longer justify its ever-increasing costs in the wake of drying resources.
“We shall, instead, re-channel the funds into better investment in public infrastructure, education, health care and jobs that will materially improve the lives of millions,” he said.
However, despite the suspension of the payment of subsidies, there has been controversies alleging that the Federal Government is secretly paying subsidies to stabilise the market prices.
The National President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) Festus Osifo on Friday accused the Federal Government of still paying subsidy on petroleum.
“In reality today, there is subsidy because as of when the earlier price was determined, the price of crude in the international market was somewhere around $80 for a barrel. But today, it has moved to about $93/94 per barrel for Brent crude. So, because it has moved, then the price [of petroleum] also needed to move.
“The only reason the price will not move is when you are able to manage your exchange rate effectively and you are able to pump in supply and bring down the exchange rate.
“So, if the exchange rate comes down today, we will not be paying subsidy. But with the exchange rate value and the price of crude oil in the international market, we have introduced subsidy,” Osifo explained in an interview with Channels Television.
Meanwhile, the Federal Government through the Group Chief executive officer (GCEO) of Nigerian National Petroleum Corporation Limited (NNPCL), Malam Mele Kyari has insisted that the government has halted payments of subsidies.
The NNPC GCEO disclosed this to State House Correspondents on Monday in Abuja.
He said that contrary to insinuations on social media, the federal government was no longer paying subsidy to any person or group for bringing petroleum products into the country.
“No subsidy whatsoever. We are recovering our full cost from the products that we import. We sell to the market.
“We understand why marketers are unable to import. We hope that they begin to do so very quickly and these are some of the interventions government is making. There is no subsidy,’’ he said.
Kyari further stated that the pockets of low queues witnessed across some states recently were due to bad roads that had made transporters to divert the product to other routes.
“We have seen in very few states pockets of very low queues. This is not unconnected with the road situation and that’s why we’re seeing some blockades on our roads.
“Moving the products from the southern depots into the northern part of the country takes them much longer time now than it used to be.
“They have to re-route their trucks around many locations for them to be able to reach their destinations and that created delays and some supply gaps. But, that has been filled and we do not see any of such problems again.
“Secondly, because of the full deregulation that we have in this sector, marketers are now competing amongst themselves,” he said.
The NNPCL GCEO also said that some of the queues were caused by the preference of customers to patronise filling stations that offered low prices.
“You must have noticed that some fuel stations will reduce their prices by N2 or N3. So customers will naturally run to the places where you have that reduction in prices and probably create panic.
“This is because those who don’t know why they are doing it will think that there’s something happening or that there’s an ominous sign of scarcity,’’ he said.
According to him, there are over 1.4 billion litres of petrol available for local consumption, both on the seas and on land, adding that there is no cause for alarm.
Kyari explained that market forces were now playing out and that marketers were competing for the product and how to satisfy their customers as well.
The NNPC Ltd has also become the sole importer of petrol because local private firms are unable to obtain foreign currency four months after imports were opened up to private players.
‘’There are few issues we’re engaging them to resolve, alongside other agencies of government, particularly critical issues around access to foreign exchange.
“And as you all know, government is doing so much to ensure supply of forex into the market.
“We know that this FX markets will stabilise the current I&E window is around 770.
“And we know that those inputs from government will crystalise and they will come to an equilibrium position in the FX market and this is the dream of this country,’’ he said.
Kyari assured marketers of a stable forex and a situation where the prices of the product would align with the prices of other commodities.
…As Isreali crisis fuels surge of oil prices
Meanwhile, following the military clashes between Israel and the Palestinian Islamist group Hamas, oil prices have experienced a surge.
On Saturday, Hamas launched the largest military assault on Israel in decades. Israel retaliated with a wave of air strikes on Gaza.
Brent crude settled $3.57, or 4.2 percent, higher at $88.15 a barrel. U.S. West Texas Intermediate crude closed at $86.38 a barrel, up $3.59 or 4.3 percent. At their session highs, both benchmarks spiked by more than $4, or over 5 percent.
Last week, Brent fell about 11 percent and WTI retreated more than 8 percent, the biggest weekly decline since March, as a darkening macroeconomic outlook intensified concerns about global demand.
