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Fuel subsidy is back as crude oil hits $94 per barrel

Fuel subsidy may have found its way back into the system following the sharp rise in crude oil price to about $94/barrel and the continued depreciation of the Naira.

President Bola Tinubu had announced the removal of fuel subsidy on May 29, 2023 and followed it up with the floating of the naira which have impacted greatly on the amount Nigerians purchase petrol.

Brent crude, the global benchmark for oil, rose to $94/barrel on Sunday, the highest figure in 2023. Oil had started the year at about $82/barrel, dipped to $70/barrel in June, but traded above $92/barrel in the past week. Just as the Naira is now sold at above N900 to a dollar in the parallel market with the Importer and Export window selling at above N700.

A litre of fuel is sold at N617 and should have gone up with the steady increase in the price of crude and depreciation of the naira against the dollar but the Federal Government, through the NNPCL had said it would not allow further hike in pump price.

However, with the cost of crude oil and the exchange rate of the dollar accounted for over 80 per cent of the cost of PMS, it is unrealistic for NNPCL and oil marketers to sell at the current price and make profit without an intervention from the Federal Government.

On his part, the President, Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, said though the cost of crude had been rising lately, the NNPCL should be able to manage it for the benefit of Nigerians, with respect to petroleum products prices.

“Crude oil is selling at a higher price and that price should impact positively, because the major importer of petroleum products is the NNPC and they do that on a swap basis, unless they are telling us that the swap is not efficient.

“For if it is efficient, they should have more money for the size of crude oil they sell, which should impact on the price they pass on to Nigerians. Yes, today it is a commercial company, but it is still owned by Nigerians and is a sovereign company.

“And the fact that Nigerians must benefit from their natural endowment by God should be reflected in the pricing of products by NNPC. That is all I’ll say about this issue,” he stated.


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Written by Olusesan Oba

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