LAGOS – Despite the recent hike in the price of Premium Motor Spirit (PMS), the Federal Government is still subsidising the product for local consumption, Dr. Thomas Ogungbangbe, the Chief Executive Officer (CEO) of CITA, has said.
Ogungbangbe said that without subsidy, a litre of the product should sell for between 80 cent and $1 dollar (about N1,600) in the country.
He also emphasised that the roll out of petroleum products from Dangote Refinery would not lead to reduction in the price of fuel in the country.
Ogungbangbe, stated this over the weekend at the Murtala Muhammed Airport (MMA) in Lagos while speaking with aviation journalists.
He declared that with deregulation and subsidy removed, Nigerians would pay more for buying the product locally.
He pointed out that despite the present increment, Nigeria was still ranked as one of the cheapest in the world, saying that the government was still paying a lot to subsidise the product.
He said: “If Dangote is going to sell a litre of petrol, he would most probably sell for maybe N1,200, N1,300 or N1,400 to be able to make his money back.
“Can people buy it? So, the government is just using the Nigerian National Petroleum Corporation Limited (NNPCL) to come in the middle of arbitrage. The government is just trying to save the pocket of the people by taking some of the heat. So that is the reason why it is only NNPCL that can buy PMS from Dangote because any other purchase or purchases would only be for exports.
“There is nobody that can go to Dangote and buy PMS at the price they would sell it and make profit because you can’t buy something for N1,200 or N1,300 and sell it for N800.”
Besides, he explained that the refining of the product locally by Dangote Refinery would not lead to reduction in price of fuel.
Advertisement
But, he said this would lead to the availability of the petroleum in the local market.
The CITA CEO, also called for a full deregulation of the industry in a way that would bring in more players, which would deepen competition and ultimately price reduction.
He said: “Like I said, Dangote would only ensure availability, it does not translate to any magical price reduction because Dangote Refinery is a for-profit-venture and it is also logging to the protocols of other refineries in the world.
“So, it is not owned by the government and it is an individual who has set up a facility with the intention of filling the gaps and also making his own profit. So, we should not expect any magic.”
Ogungbangbe would however subscribe to the complete deregulation and removal of subsidy.
According to him, what the government has been doing is “a measured approach,” which he stated would eventually result in total deregulation.
He added: “So even as it is, the government is giving almost 50 per cent subsidy on PMS even at the present increment, the government is still taking heat. So, it is only the government that can buy it, there is no other company that can buy it and make profit.
“My advice for the government is to remove the subsidy completely because there is no way the government can survive at the going rate.”
On the protest that might trail the total subsidy removal, he said, “That is the reason the government is taking a measured approach at doing it and it is making it scalable. So, we should still expect more to come. And the truth of the case is that if we are copying the Western world, go to London, go to America, do they not have crude oil too?
“So how much is crude oil being sold? It is practically the same. Go to other African countries, Benin Republic is there, go to Zambia, go to Tanzania, go to South Africa, how much is being sold? So we need to understand and appreciate that the government is doing enough.”
