BREAKING: This is Why Federal Government can’t afford N6Trn fuel subsidy this year – Marketers Revealed
Marketers have said the Federal Government cannot afford to spend N6 trillion this year as fuel subsidy in the face of current economic realities.
They said subsidy removal is something that must be done, as there were no more viable options.
Mr. Olumide Adeosun, Chairman, Major Oil Marketers Association of Nigeria, MOMAN, made the disclosure during a panel session at the just concluded Association of Energy Correspondents of Nigeria (NAEC) Strategic International Conference in Lagos.
Adeosun, who spoke on “Energy Transition, PIA, Petroleum Pricing and the Way Forward for the Downstream Sector”, said removing fuel subsidy is something the federal government must do.
Represented by Mr Clement Isong, Chief Executive Officer, MOMAN, Adeosun also said it would be extremely difficult to “wean Nigerians off” cheap Premium Motor Spirit, also known as petrol.
He said: “It is something that must be done as there are no more viable options.
“We are told that this year the fuel subsidy bill to the Federal Government may be between N5 trillion and N6 trillion. Clearly, Nigeria cannot afford this.
“To wean Nigeria off this subsidy, a lot of investments must be done to sensitise Nigerians in convincing them and finding alternatives.
“We need to begin to remove the subsidy and mitigate the pains Nigerians will feel when petroleum prices begin to manifest their true value.”
On the Petroleum Industry Act, PIA, 2021, Adeosun said marketers believe it is an excellent piece of legislation and are optimistic that the industry was headed in the right direction with the enactment of the act.
“We are now at the point of implementation, which is taking a bit longer than hoped but this is not necessarily a bad thing.
“The President postponed the implementation of free market pricing, which has caused a slowdown with respect to benefits expected from free competitive open market pricing, such as new investments and subsidy removal,” he said.
The MOMAN chairman further said the marketers were also very convinced that gas as energy transition was clearly the way forward.
Recall the decade of gas was declared by the Federal Government in January 2021.
He, however, said the increase in gas prices worldwide and the unavailability of the product had made it a little more difficult in the roll out.
Adeosun said: “The ordinary Nigerian who was meant to transit to gas, not just for cooking but also for powering automobiles and power generation is struggling and because PMS pricing is yet to be fully deregulated.”
“It creates an aberration and additional challenge for the adoption of gas, as most people are still dependent on cheap PMS for their cars and generators.
“Energy correspondents need to share as much information as possible with the market and public with respect to cost prices, quality, product specifications, customer service and pump prices...TAP.TO.READ MORE.
“That is the best regulation you can ask for,” Adeosun said.