During the Stanbic IBTC Energy and Infrastructure Breakfast Session in Lagos, Gabriel Ogbechie, the CEO of Rainoil Limited, revealed that the federal government has resumed paying the controversial fuel subsidy. This decision follows the devaluation of the Naira in the foreign exchange market....CONTINUE READING
Ogbechie emphasized that with Nigeria’s daily fuel consumption reaching 40 million liters and the exchange rate at N1,300 per dollar, the subsidy per liter of fuel ranges between N400 and N500. Consequently, the monthly expenditure on subsidy amounts to approximately N600 billion.
He highlighted the timeline of events, stating, “When Mr. President came in May last year, one of the things he said is that Subsidy is gone. And truly subsidy was gone because immediately the price of fuel moved from 200 to 500 per liter. At that point truly, subsidy was gone.”
“During that period, the Dollar was exchanging for N460, but a few weeks later, the government devalued the exchange rate. And Dollar moved to about N750. At that point, subsidy was beginning to come back,” Ogbechie explained.
He further elucidated, “The moment the two markets officially closed, officially the market went to about N1,300. At that point, that conversation was out of the window. Subsidy was fully back on petrol. If you want to know where petrol should be, just look at where diesel is. Diesel is about N1,300 and petrol is still selling for N600.”
Ogbechie estimated the subsidy expenditure, stating, “So I can tell you for free that there there is at least N400 or N500 liters subsidy on petrol today. If you look at our daily consumption, say 40 million liters, and we’re spending N500 per liter, that is about N20 billion every day, N600 billion every month and 7.2 trillion yearly depending on how we look at it. So, subsidy is definitely back on petrol.”
Regarding NNPC’s role as the sole importer of petrol in Nigeria, Ogbechie asserted, “And if you look at it, NNPC remains the sole importer of petrol in this country because there is subsidy on petrol so the price has to be pegged.”
This revelation comes amid ongoing debates about the reinstatement of fuel subsidy, with prominent figures like former governor Nasir El Rufai and the Special Adviser to the President on Energy, Mrs. Olu Veŕheijen, weighing in on the issue.
However, NNPC’s Group CEO, Mele Kyari, maintains that the company is only recovering import costs and not receiving subsidies from the federal government. He stated, “I told you there’s no subsidy whatsoever, we are recovering our full cost from the products that we import. We sell to the market, we understand why the marketers are unable to import. We hope that they do this very quickly and these are some of the interventions the government is doing. There is no subsidy.”
