IPMAN slams petrol subsidy, proffers solution to fuel scarcity

The Independent Petroleum Marketers Association of Nigeria (lPMAN) has said petrol subsidy in Nigeria was no longer sustainable.

Mr Mike Osatuyi, the National Operations Controller of lPMAN, said this in an interview with the News Agency of Nigeria (NAN) on Monday.

This came amid the ongoing hike in the pump price of petrol at filling stations across the country.

While lamenting the embarrassing gap between expenditure and revenue in the 2023 proposed budget, Osatuyi noted the government hoped to finance subsidy on petrol up to June 2023 at a cost of N3.6 trillion, using the Central Bank of Nigeria (CBN) official rate of N435 to a dollar.

According to him, petrol subsidy has led to increased budget deficit and caused borrowing setbacks to the economy.

He thus advocated total deregulation as a solution to challenges confronting the downstream sector.

“Subsidy regime does not allow competition, while monopoly is the language of petrol business as the Nigerian National Petroleum Company (NNPC) Ltd. is the sole importer, manager and distributor of petrol.

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“Subsidy kills efficiency in the procurement and supply chain of petrol business operations and deprives the government of huge revenue. Nigeria’s debt servicing of N6.3 trillion per year is not healthy for the country with mere capital expenditure of N5.35 trillion.

“2023 budget projected crude oil production of 1.69 million per day, which is achievable in view of pragmatic measures taken by the government for pipeline surveillance and zero tolerance to crude oil theft.

“If CBN failed to avail marketers’ forex at official rate of N445 to a dollar after deregulation, importers will have no choice than to turn to the black market for forex, which will push up the pump price of petrol to between 650 naira to 700 naira per litre.

“Total deregulation remains the best solution to ending fuel scarcity. The deregulation of the downstream sector remains the only potent and lasting solution to scarcity.

“But the cost implication of the policy will make the price of petrol too expensive for Nigerians, as deregulation will shift the burden from the government to users of the product.”