By Gloria Ogbonna
The Nigerian National Petroleum Company Limited (NNPCL) and fuel marketers, represented by the Independent Petroleum Marketers Association of Nigeria, have engaged in a heated dispute once again, this time over the elimination of subsidies on petrol.
This disagreement unfolded amidst the declining value of the naira against the United States dollar, witnessed in both official and parallel markets.
The official exchange rate saw the naira closing at 998/dollar, while it reached 1,225/dollar at the black market. Economists and oil marketers noted an apparent increase in Premium Motor Spirit (PMS) subsidies, linking it to the plummeting value of the naira and the cost of crude oil. However, the NNPC countered these assertions, affirming its recovery of full importation costs for petrol.
Bismarck Rewane, CEO of Financial Derivatives Company, clarified during a live TV session that the reduction in fuel subsidies did not equate to their complete removal. Echoing this sentiment, oil marketers suggested that in a free market, PMS prices should be approximately N1,200/litre, contrasting significantly with the current selling price range of N617/litre to N660/litre.
Various stakeholders, including Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, acknowledged the existence of partial subsidies on petrol. Yusuf emphasized the government's subsidization of the commodity for political, social, and economic reasons, balancing the nation's economic growth and citizens' welfare.
Contrary to these viewpoints, NNPCL's Chief Corporate Communications Officer, Olufemi Soneye, dismissed claims of subsidies, affirming the government's cessation of petrol subsidies as declared by President Bola Tinubu on May 29, 2023.
The recent tumult over petrol subsidies aligns with the ongoing challenges surrounding the Nigerian currency. The naira witnessed a sharp decline against the dollar, closing at N988.46/$ on the Investors and Exporters Window. This downward trend, attributed to various factors including backlog in unsettled forwards, dollar inflow promises, and high inflation, prompts concerns for the naira's future performance in 2024.
Additionally, the NNPCL reported 112 cases of crude oil theft within one week in the Niger Delta, unveiling the severity of illegal activities impacting the nation's oil production and revenue. The firm's documentary highlighted numerous instances of illegal refineries, storage sites, and connections, shedding light on the ongoing battle against crude oil theft plaguing Nigeria's oil sector.
These multifaceted challenges, encompassing subsidy disputes, currency depreciation, and rampant oil theft, underscore the complexity of Nigeria's oil markets, posing significant hurdles to the country's economic stability and oil production capabilities.
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