Federal Government has restored the subsidy on petrol, President of PENGASSAN (Petroleum and Natural Gas Senior Staff Association of Nigeria), Festus Osifo has confirmed. Despite the official government policy of breaking with the subsidy regime since May, Osifo disclosed this during a live television program.
Osifo stated, "The government has to come clean. In reality today, there is a subsidy because when the earlier price was determined, the price of crude in the international market was less than $80 a barrel. But today, it has moved to about $93/94 per barrel for Brent crude. So, because it has moved, then the price of petrol also needed to move."
President Bola Tinubu had announced the removal of fuel subsidy in his inaugural speech on May 29th.
However, Osifo said that due to the cost of crude oil in the international market and the exchange rate, the government still pays subsidies on petrol. He explained that two fundamental factors contributed to the current pricing: the exchange rate and the price of crude in the international market. Osifo said that the price of crude has been increasing in the last few weeks, reaching around $95 per barrel. Despite these speculations, Osifo asserted that there is no basis for an increase in the price of Premium Motor Spirit (PMS). Osifo mentioned that the exchange rate has previously stirred rapid movements but has now stabilized around N770 per dollar. He urged the government to work on the exchange rate, aiming for it to be somewhere around N600 to N630 for a dollar so that PMS could be purchased at a reduced rate.
Osifo emphasized the importance of managing the exchange rate effectively to avoid subsidies. He affirmed, "The reason we are paying subsidy today is that our exchange rate has skyrocketed, and if we continuously allow it to rise, it will be a nightmare for everyone." Osifo stressed that for the government to stop subsidizing petroleum products, they must effectively manage the exchange rate and ensure a sufficient supply of petrol.
Osifo's comments on the restoration of the fuel subsidy have sparked a debate among Nigerians. While some believe that the government's decision to reintroduce the subsidy is a step in the right direction, others see it as a setback for the country's economic progress.
Those in favor of the subsidy argue that it will provide relief to Nigerians who are already burdened with high living costs. They believe that the government should prioritize the well-being of its citizens over other economic considerations. They also argue that the subsidy will ensure a stable supply of petrol and prevent any possible fuel scarcity.
On the other hand, critics of the subsidy argue that it is a drain on the country's resources and hampers economic growth. They argue that the funds used for the subsidy could be better invested in infrastructure development, education, healthcare, or other sectors that benefit the overall population. They also believe that maintaining the subsidy encourages corruption and benefits only a few privileged individuals.
Amidst this ongoing debate, Osifo's call for the government to focus on managing the exchange rate effectively has gained attention. He emphasized that a stable exchange rate would reduce the need for the subsidy and allow for a more efficient pricing system for petroleum products.
Many experts agree with Osifo's assessment, believing that a stable exchange rate is crucial for sustainable economic growth. They argue that a fluctuating exchange rate not only increases the cost of imported goods, including petroleum products, but also creates uncertainty and hampers foreign investment.
Regardless of the differing opinions, it is clear that the issue of fuel subsidies in Nigeria remains a complex and contentious one. The government will need to carefully consider the economic implications and the overall impact on the lives of its citizens before making any further decisions in this regard.