‘We mustn’t go back’ — marketers caution FG against reintroducing subsidy

Oil marketers have cautioned the federal government against the reintroduction of the petrol subsidy regime.

They made the call during the Nigeria Association of Energy Correspondents (NAEC) International Strategic Conference 2023, held in Lagos.

On May 29, 2023, President Bola Tinubu announced that the subsidy regime was over. The pump price of petrol quickly increased to N617 per litre in the federal capital territory (FCT), in July, following the statement.

Speaking at the conference, Clement Isong, chief executive officer (CEO) and chairman of the Major Oil Marketers Association of Nigeria (MOMAN), said the previous subsidy arrangement had an arduous effect on the economy, noting that there is still “subsidy in some areas”.

“We must not go back to it,” he said.

However, Isong believes there is an opportunity to assist in the short term to limit rising costs for Nigerians as the country transitions away from the subsidy regime.

“So, essentially, where are we today? Is the market fully deregulated? The short answer is yes,” he said.

“Are we at the price we need to be to recover the cost at the pump? Not everywhere, perhaps.

“The increase in diesel cost in the deregulated market to a N1,000 per litre, the marketers are not happy because they need to push up their pricing in order to recover their costs.

“In some places, there’s full cost recovery, but not in all markets. Is there still subsidy? We keep asking that question. I will say yes, in some areas, there is. Is there an opportunity to optimise, to become more efficient, to reduce the cost? Yes, for individuals and also for the operators or the marketers.”

Isong said the high price of the commodity should “force all of us” — consumers —  to be more efficient, and the operators to look for innovative ways of pushing down their prices to be competitive in the market.

“I want you to just imagine if prices had stayed where they were before, N185 and world prices are where they are right (now), this country would have died. So the subsidy is much less than it used to be,” he said.

On his part, Bolaji Osunsanya, CEO of Axxela, represented by Fisayo Duduyemi, the company’s chief strategy, said like every other commodity, petroleum products should be “allowed to free float”.

“So, even though there may be some fluctuations, it is a better situation to have, because that will then bring some investors into the game to look at those opportunities for them to invest,” he said.

‘PMS IMPORTATION MONOPOLY MUST STOP’

Also speaking, Tunji Oyebanji, managing director of 11 PLC, said the downstream industry must address its current limitations.

“First and foremost, we need to get ourselves out of the bottleneck we have created for ourselves, in which NNPC is the sole importer of fuel in Nigeria,” he said.

“That monopoly needs to be broken down and dismantled completely and when I say that I didn’t say NNPC, I said the monopoly of the single supply into the country is not good because it is inefficient, and it’s not sustainable.”

Oyebanji added that regulators must find ways to get other participants into the importation market in order to create competition.