Petrol subsidy dispute: NNPC, marketers say price should be N1,200/litre

The Nigerian National Petroleum Company Limited (NNPC) and the Independent Petroleum Marketers Association of Nigeria (IPMAN) have renewed their disagreement over the removal of subsidy on petrol.

The dispute comes amid the weakening of the naira against the US dollar in both the official and the parallel markets.

On Tuesday, the naira closed at 998/dollar in the official market and 1,225/dollar in the black market.

The depreciation of the naira has increased the cost of importing Premium Motor Spirit (PMS), commonly known as petrol, which is solely imported by the NNPC.

Economists and oil marketers have argued that the subsidy on petrol has risen in recent times and that the commodity should sell for N1,200/litre in a free market.

However, the NNPC has denied this claim and insisted that it is recovering its full cost of importation. The current price of petrol ranges from N617/litre to N660/litre, depending on the location.

The Chief Executive Officer of Financial Derivatives Company, Bismarck Rewane, said on a live television programme on ChannelsTV on Sunday that the subsidy on petrol was not removed but reduced.

He explained that the government was implementing a quasi-subsidy, which means that it was taking out about 50 per cent of the subsidy instead of 100 per cent.

The Chief Executive Officer of Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, also said that there was a partial subsidy on petrol, which was justified by political, social and economic reasons. He said that the government was trying to balance the interests of the consumers, the producers and the fiscal authorities.

The National Public Relations Officer of IPMAN, Chief Ukadike Chinedu, maintained that the subsidy on petrol was increasing and that the market price of the commodity should be around N1,200/litre.

He compared the cost of petrol in the US, where premium petrol sells for $2.99 and super petrol sells for $3.15 or $3.10, depending on the region.

 He said that $3 in Nigeria was over N3,000, based on the parallel market rate of over N1,000 per dollar. He also noted that diesel, which sells for over N1,000/litre in Nigeria, was usually cheaper than petrol in a free market.

Ukadike expressed optimism that the price of refined petroleum products would reduce when the Port Harcourt and Dangote refineries start production.

He said that the government was making efforts to boost the local refining capacity, which would reduce the dependence on importation. He said that the operation of the refineries would help stabilise the price of PMS and other petroleum products in Nigeria.

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