What to know about fuel subsidy removal – NNPC Ltd

THE Nigerian National Petroleum Company Limited (NNPC Ltd) has highlighted a couple of issues it believed Nigerians needed to know about the fuel subsidy removal.

The new administration of President Bola Tinubu has taken the courage to end the fuel subsidy regime, which previous administrations had shied away from because of its economic and political implications.

As a result, citizens are currently experiencing an almost 200 per cent hike in the pump price of fuel, which has caused a surge in the cost of transportation, food and other items.


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In an infographic shared on its official Twitter handle on Saturday, June 3, NNPC Ltd conveyed some of the issues.

According to the enterprise, the future of petrol supply to the domestic market now lies in the hands of the Dangote, NNPC, and other domestic refineries.

“NNPC Ltd will no longer be the sole supplier of petrol. By law, no player can control more than 30 per cent of the market,” it stated.

NPPC Ltd had increased the pump price of petrol even before the end of June date slated to do so, based on the provisions made in the 2023 Fiscal Framework and Appropriation Act and Petroleum Industry Act (PIA).

“Delaying subsidy removal till the end of June 2023 could have caused serious nationwide fuel scarcity and hardship as NNPC Ltd was owed over N2.8 trillion and NNPC Ltd can no longer sustain sufficient supply to the market,” it claimed.

Another concern the NNPC Ltd conveyed in the infographic was that for filing stations to be able to restock petrol, they have to resort to selling the old stock at the new prices.

The NNPC Ltd had raised the pump price of fuel from about N184 to about N550, depending on certain logistics, like transportation, involved in supplies.

It, however, noted that with time the price of fuel would be determined by market forces of demand and supply, and by then the price could moderate.

“These are some of the inevitable costs of reforms; we need the reforms to prevent the collapse of the economy,” the chief executive officer of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, told The ICIR.

To Yusuf, things would have to get worse before they get better, saying, “It would be painful initially, but it would progressively get better. As the supply-side response improves, the prices will moderate.”






     

     

    He suggested that the government should urgently put immediate and short-term measures in place to mitigate the pains of the sharp increases in transportation costs on the citizens.

    Food and transportation account for over 50 per cent of the household budget of the poor, and, according to Yusuf, the Federal government should do something urgently to ameliorate their sufferings.

    “Such measures should focus on reducing the cost of food, provision of cheaper public transportation options, improving power supply to reduce demand for fuel for electricity generators, promoting the use of autogas, reduction in import tariffs for intermediate products for food processing companies, eliminating taxes and levies on all agricultural inputs to boost food production, and reduction in import tariffs on mass transit buses, among others,” he recommended.

    NNPC’s petrol pricing should be, at least, 15 per cent less than the prices of private fuel stations, Yusuf added. “This is necessary to signal social sensitivity to the government,” he said.

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