FG now spends N600bn monthly on petrol subsidy, Rainoil CEO claims

Gabriel Ogbechie, chief executive officer (CEO) of Rainoil Limited, claims the federal government (FG) now spends N600 billion on petrol subsidy monthly.

Ogbechie spoke on Tuesday during the Stanbic IBTC Energy and Infrastructure Breakfast Session held in Lagos.

President Bola Tinubu, in his inauguration speech on May 29, 2023, said the subsidy on petrol “is gone”.

However, according to Ogbechie, the federal government resumed petrol subsidy following the devaluation of the naira in the foreign exchange (FX) market.

He said with the current daily consumption at 40 million litres and the FX rate at N1,300, the government’s subsidy per litre on petrol falls between N400 and N500.

“When Mr President came 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 N200 per litre to N500 per litre,” he said.

“At that point, truly subsidy was gone, because officially, naira was exchanging maybe for anything between N450 to N470. But a few weeks later, they merged the exchange rates and naira officially moved to about N750. At that point, subsidy was beginning to come back.

“Again, depending on what the exchange rate was, we could go into an argument on whether the exchange was N750 or N500, or whatever. But the moment the two markets officially closed by January this year due to a policy, the CBN came and officially, the market went to about N1300 at that point that conversation was out of the window. There was officially subsidy on petrol.

“If you want to know where petrol should be. Just look at where diesel is. Diesel is about N1300, Petrol is selling for N600. So I can tell you for free top of my head, there is at least N400 or N500 per litre subsidy on petrol today.

“If you look at what our daily consumption say, conservatively 40 million litres a day if you’re spending N500, that’s at least N20 billion every day, N600 billion every month or N7.2 trillion depending on how you look at it. So subsidy is definitely back on petrol.”

Ogbechie said the Nigerian National Petroleum Company (NNPC) being the only petrol importer in the country proves the continued existence of subsidy.

He urged the government to prioritise modular refining to improve self-sufficiency in petroleum products.

The Nigerian National Petroleum Company (NNPC) Limited, on January 3, had denied the return of petrol subsidy, saying it has been removed entirely.

However, on April 15, Nasir el-Rufai, former governor of Kaduna state, said the federal government is spending more on petrol subsidy than before.