THE possibility that the country is still paying fuel subsidies does not warrant a resort to propaganda by the government, rather it should counteract the argument based on facts, notably on the landing cost of petrol, only shy of the N1, 000 mark over a year ago, that when added to triggers such as exchange rate devaluation and inflation makes the current prices of petrol at between N700-N850 seem like child’s play.
The Nigerian National Petroleum Company Limited (NNPCL), in addition to a few cabinet ministers have been active in oiling that propaganda machine, always allaying fears of consumers over price hike or product scarcity.
That is only because the real world calculation does not obtain, so it looks like yet another policy failure by the government in power. A new landing cost of petrol followed President Bola Tinubu to power, valued at N720 by October 2023, that was five months after he took office and here we are talking about over one year later. There is no way petrol would be selling at less than N1, 000 unless Tinubu is operating a political economy more ideal in an Utopian society, without a functional refinery to call its own, the free fall of the Naira and striking out petrol subsidy, he should tell the citizens who is paying for the differentials.
The APC-led FG need to come clean. Nigeria is not moving forward and the most powerful arm of government should not be built on propaganda and grand deception. The International Monetary Fund (IMF) also weighed in on the argument by economic pundits that the Nigerian government has, through the backdoor, resumed the payment of subsidies on Premium Motor Spirit (PMS), otherwise known as petrol. Recall that on May 29, 2023, during his inauguration speech, President Tinubu announced an end to petrol subsidy, triggering a hike in the prices of goods and services in the country. A few weeks later, the Central Bank of Nigeria (CBN) collapsed the different exchange rate regimes into one, with the value of the naira to the dollar weakening.
It is now about N1,499/$1 at the official window and N1,515/$1 at the parallel market. Over the past months, the IMF expressed concerns over the petrol price being capped at retail stations, with a gaping differential that no one seems to be talking about.
After the removal of the petrol subsidy in May 2023, the pump price changed from N185 per litre to N400 per litre and then to N568 per litre at NNPC fueling stations, while others sold at above N600. The government had said the prices would fluctuate after subsidy removal from time to time but the pump price has maintained a steady rise despite the fact that the price of crude oil in the global market keeps going up and down.
The IMF said the Tinubu administration has “capped retail fuel and electricity prices” ostensibly to “ease the impact of rapidly rising inflation on living conditions, thus partially reversing the fuel subsidy removal.” Little wonder news made the rounds in in September that despite the steely assurances by President Tinubu that the subsidy was gone, the federal government paid N169.4 billion as subsidy in August to keep the pump price at N620 per litre.
It is clear that it is still doing this for a document from the Federal Account Allocation Committee (FAAC), sighted by reporters, showed that in August 2023, the Nigerian Liquefied Natural Gas (NLNG) paid $275m as dividends to Nigeria via NNPC Limited. NNPC Limited used $220 million (N169.4 billion at N770/$) out of the $275 million to pay for the PMS subsidy. Then NNPC was said to have held back $55 million, illegally.
Selling petrol at less than N1, 000 is not even realizable in Niger Republic, despite a steady product supply, perhaps only in El Dorado but the President is yet to take us there, only that he cannot afford to eat his words for political rather than economic reasons. The global lender advised that he completely stops the payment of subsidies to free up funds to run the government.
But if Tinubu is persuaded by a pro-Western outlook as peddled by agents such as the IMF and visit hardship on the citizenry or if he has realized the folly of subsidy removal, it is incumbent on him to come clean. He should stop playing on the intelligence of the people.
