In a new development, oil marketers have stated that the Nigerian Federal Government has made significant savings to the tune of N400 billion since the removal of the petrol subsidy on May 31, 2023. Furthermore, they hinted at a potential increase in the cost of petrol in July, given the government’s recent decision to allow the naira to float against the US dollar.
This move came after the Central Bank of Nigeria unified the country’s exchange rates into the Investors and Exporters window on June 14, 2023, letting market forces determine the exchange rate.
According to industry insiders, Nigeria has saved hundreds of billions since stopping the subsidy regime in May, based on the Nigerian National Petroleum Company Limited’s previous subsidy expenditure.
“Now, the government is earning money. The subsidy removal has yielded hundreds of billions, whether you measure it in naira or dollars. We are aware of their previous monthly losses,” the National President of the Independent Petroleum Marketers Association of Nigeria, Chinedu Okonkwo, revealed.
Okonkwo highlighted that oil marketers had been privy to the NNPC’s monthly subsidy expenses, as expressed by the firm’s Group Chief Executive Officer, Mele Kyari, during an industry meeting in February. Kyari had previously outlined the significant cost disparity between the landing and selling prices of petrol, which resulted in over N400bn of subsidy every month.
On the prospect of independent petrol imports, Okonkwo disclosed ongoing meetings with parties interested in initiating petrol imports.
While acknowledging that petrol prices would rise in response to forex rates, Okonkwo maintained that the subsidy removal would not inevitably cause continuous PMS cost increases. He stated that the market dynamics would determine pricing and capping.
Okonkwo also stated that “if we begin to meet our OPEC quota and other areas of generating foreign exchange, the naira will begin to firm up. And this will result in cheaper fuel.”
Meanwhile, Billy Gillis-Harry, the President of the Petroleum Products Retail Outlets Owners Association of Nigeria, stated that the petrol price would track the exchange rate, hence predicting a potential increase in fuel prices. However, he expressed optimism about future exchange rate reductions under President Bola Tinubu’s government.
In addition to negotiations with the government on refinery operations, Gillis-Harry confirmed that PETROAN is in the process of securing an import license for petrol.
