Oil marketers in Nigeria are standing firm on their assertion that the petrol subsidy is still in place, despite the Nigerian National Petroleum Company Limited (NNPCL) dismissing the claim as false. The NNPCL maintains that the subsidy on petrol has ceased following the deregulation of the downstream petroleum sector.
A clash between the NNPCL and the Independent Petroleum Marketers Association of Nigeria (IPMAN) members unfolded on Tuesday, January 2, 2024, centering around the removal of the petrol subsidy.
The demand for an increase in petrol prices comes in the wake of the depreciation of the Nigerian naira against the US dollar in both official and parallel markets. Experts and oil marketers argue that the petrol subsidy is on the rise due to the weakened naira and escalating crude oil costs. Contrarily, the NNPCL refutes this claim, asserting that it is recovering the total cost of petrol imports and maintains that the subsidy has been reduced, not eliminated.
Bismark Rewane, CEO of Financial Derivatives Company, stated that the fuel subsidy has not been entirely removed but rather reduced, adding to the ongoing debate.
Oil marketers argue that, considering the crash of the local currency against the US dollar and the increasing cost of crude oil, petrol should be priced at around N1,200 per litre in the free market. Presently, petrol is being sold at N617 per litre and N660 per litre, exclusively imported by the NNPCL. The Chief Corporate Communications Officer of NNPCL, Olufemi Soneye, dismisses the experts’ and marketers’ positions as mere assumptions, maintaining that the Nigerian government has discontinued petrol subsidies.
The developments unfold against the backdrop of Nigerian refineries gearing up for production. The Port Harcourt refinery is undergoing a test run, and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has directed oil companies to supply approximately 483,000 barrels of crude oil daily to local refineries for the next six months from January 2024.
This initiative aligns with Nigeria’s efforts to ensure a consistent supply of crude oil to local refineries for domestic consumption. Around six local refineries, including the Dangote refinery with a capacity of 650,000 barrels, are poised to commence operations. Dangote refinery has already received four million barrels of crude oil out of the promised six million from the NNPCL, with the prospect of starting its operations soon. The NUPRC guidelines indicate that the Dangote refinery is slated to receive the largest supply of 325,000 barrels daily. Following Dangote, another Nigerian refinery is in the midst of a test run, signaling its readiness to commence operations in the near future.