The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has confirmed the reinstatement of fuel subsidy during President Bola Tinubu’s administration.
President Bola Tinubu initially announced the removal of fuel subsidy on his first day in office, which led to a significant increase in fuel prices from N197 to a range between N480 and N570. Subsequently, the pump price was further adjusted to N620. Despite assurances that the price would remain stable, reports suggested that it might rise due to fluctuations in the global oil market.
There were also speculations that the federal government had intervened to prevent further price increases, although these claims were officially denied. However, investigative findings by Daily Trust uncovered documents revealing that, contrary to official statements, the federal government disbursed N169.4 billion as fuel subsidy in August to maintain the pump price at N620 per liter.
A document from the Federal Account Allocation Committee (FAAC) indicated that in August 2023, the Nigerian Liquefied Natural Gas (NLNG) paid $275 million in dividends to Nigeria through NNPC Limited. NNPC Limited utilized $220 million (equivalent to N169.4 billion at an exchange rate of N770/$) from this amount to cover the Petroleum Motor Spirit (PMS) subsidy, while retaining $55 million, reportedly inappropriately.
While the government neither confirmed nor refuted this revelation, Festus Osifo, the National President of PENGASSAN, addressed the situation on Channels Television’s Politics Today program. Osifo explained that due to the rising cost of crude oil in the international market and exchange rate fluctuations, the government continues to subsidize petrol.
He elaborated, “They [the government] are paying subsidy today. 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 per 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.”
Osifo emphasized that for the government to cease subsidizing petroleum, two critical conditions must be met.
“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,” the PENGASSAN leader concluded.
