Nigeria has saved over N400 billion in the last 30 days by scrapping the fuel subsidy on Premium Motor Spirit (PMS), also known as petrol, according to operators in the downstream oil and gas sector.
The subsidy removal was one of the major economic policies implemented by President Bola Ahmed Tinubu, who assumed office in May 2023.
The Independent Petroleum Marketers Association of Nigeria (IPMAN), the umbrella body of private oil marketers in the country, confirmed this in an interview with Daily Post.
The National President of IPMAN, Chinedu Okonkwo, said that the subsidy removal was a long overdue and courageous decision by the president, which would have positive impacts on the economy in the long run.
He said that the subsidy removal, which was announced by the president in his inaugural address on May 29, 20231, was in line with the recommendations of the International Monetary Fund (IMF), which had advised Nigeria to end the costly and unsustainable subsidy regime2. He said that the subsidy was costing the government about N2 trillion annually, which could be better spent on other developmental projects and reducing corruption in the oil sector.
Okonkwo also said that the subsidy removal was accompanied by the free-float of the naira currency, which was devalued by the Central Bank of Nigeria (CBN) from N461 to N631 per US dollar at the Importers and Exporters (I&E) window.
He said that this would improve the efficiency of the foreign exchange market, attract foreign investment, and reduce inflationary pressures.
He said that these policies would affect the cost of imports and exports in Nigeria, especially fuel and imported goods.
Okonkwo said that the cost of fuel would be determined by market forces, which could lead to an increase or a decrease depending on the supply and demand of forex. He said that this would have some initial negative impacts on the masses, but they would gradually reduce by introducing Compressed Natural Gas (CNG) as an alternative to petrol.
He said that CNG was cheaper, cleaner, and more abundant than petrol, and that IPMAN was working with the government to promote its use in Nigeria.
Okonkwo added that CNG would reduce the dependence on imported fuel and save foreign exchange for the country. He urged Nigerians to support and cooperate with the government in implementing these policies, saying that they were necessary to revive and transform the economy.
