*The Independent Petroleum Marketers Association of Nigeria argues the subsidy regime kills efficiency in the procurement and supply chain of petrol business operations and deprives the Federal Government of huge revenue

Isola Moses | ConsumerConnect

In regard to current increase in the pump price of petrol at filling stations across the country, the Independent Petroleum Marketers Association of Nigeria (lPMAN), has restated that subsidy on Premium Motor Spirit, otherwise referred to as petrol, is no longer sustainable.

Mr. Mike Osatuyi, National Operations Controller of lPMAN, who again, stressed this in an interview with the News Agency of Nigeria Monday, November 14, 2022, in Lagos, condemned payment of subsidy on petrol.

The IPMAN chief said the Federal Government had N20.51 trillion expenditure in the 2023 budget against a revenue of N9.7 trillion, leaving a deficit of N10.78 trillion.

He also noted the government hoped to finance subsidy on petrol up to June 2023 at a cost of N3.6 trillion, using Central Bank of Nigeria (CBN) official rate of N435 to a Dollar.

The National Operations Controller stated: “At present, the CBN official rate is hovering around N445 to a Dollar, which is above the N435 to a Dollar projected in the 2023 budget.”

Osatuyi, however, said the petrol subsidy regime had led to an increase in budget deficit and caused borrowing setbacks to the Nigerian economy.

According to him, subsidy has make smuggling of petrol a thriving business because of the huge profit involved in the illegality.

He

“Subsidy regime does not allow competition, while monopoly is the language of petrol business as the Nigerian National Petroleum Company (NNPC) Limited is the sole importer, manager and distributor of petrol.

“Subsidy kills efficiency in the procurement and supply chain of petrol business operations and deprives government of huge revenue,” Osatuyi said.

The Association said petrol subsidy could have benefitted Nigerian consumers, but half of “assumed consumption” found its way to neighbouring countries.

Osatuyi further stated that Nigeria’s petrol is cheaper at landing cost compared to neighbouring countries.

He, therefore, urged the government to put all necessary palliatives in place to cushion the negative effects of the imminent increase in price of petrol before removing subsidy in the economy.

He said: “Nigeria’s debt servicing of N6.3 trillion per year is not healthy for the country with mere capital expenditure of N5.35 trillion.

“2023 budget projected crude oil production of 1.69 million per day, which is achievable in view of pragramatic measures taken by the government for pipeline surveillance and zero tolerance to crude oil theft.”

How consumers may pay  between N650 and N700 for petrol per litre

Meanwhile, Osatuyi has explained “if CBN fails to avail marketers Forex at official rate of N445 to a Dollar after deregulation, importers will have no choice than to turn to the black market for Forex, which will push up the pump price of petrol to between 650 Naira to 700 Naira per litre.”

IPMAN calls for deregulation of downstream sector

In a related development, the IPMAN National Operations Controller has said total deregulation of the downstream sector of the petroleum industry remains the solution to fuel scarcity in Nigeria.

He emphasised that deregulation remains the answer to all challenges confronting the downstream sector, as it allows all the players to key into the sector and import petroleum products freely.

Osatuyi stated: “Total deregulation remains the best solution to ending fuel scarcity.

“The deregulation of the downstream sector remains the only potent and lasting solution to scarcity.

“But the cost implication of the policy will make the price of petrol too expensive for Nigerians, as deregulation will shift the burden from the government to users of the product.”