The Nigerian government is believed to be making plans to provide a new temporary subsidy regime for Premium Motor Spirit (PMS), according to sources in the presidency and moves being made by the government.
Following the report that petrol pump price is going to hit N720 per liter in the coming weeks, the Nigerian National Petroleum Company Limited (NNPCL), announced that it has no plan to increase fuel prices. The NNPCL assured Nigerians that fuel will continue to sell at N588 and N617 across its stations, even though market indices support marketers’ stance that given the continuous drop of the naira in the forex market, the prices will surely go up.
“It is simple mathematics, once the dollar is going up, have it in mind that the prices of petroleum products would definitely increase because the products are dollar-driven,” the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike said.
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However, the crux of the matter is that further increase in pump price will push Nigerians, already overburdened by the subsidy removal-induced high cost of living, to their breaking point.
The Nigerian Labour Congress has already threatened to embark on an indefinite strike if the prices of fuel rise again.
Against this backdrop, the federal government is believed to be working on a plan to provide some subsidy to ensure that petrol prices are not raised above where they currently are.
President Bola Tinubu, who announced the removal of fuel subsidy in May, said on Tuesday that petrol prices will not be increased. He however said that he is committed to maintaining competitiveness in the petroleum industry.
During a press briefing at the State House, Ajuri Ngelale, the spokesperson for the President, said that the President is urging all parties involved to maintain a sense of calm and refrain from jumping to hasty judgments in light of recent threats issued by the organized labor movement.
The removal of fuel subsidy has put the government in a very difficult situation, especially as it came along with the deregulation of the FX market, which has seen the naira perform horribly – dropping to N950 against the dollar.
Though Tinubu affirms the continuation of the deregulation policy – asserting Nigeria’s pump prices as the most cost-effective among West African neighbors, his promise that fuel pump prices will not be increased is believed to be backed by a fresh subsidy plan that the NNPCL will execute.
The temporary subsidy, if implemented, will follow the steps of the Kenyan government which has reinstated its subsidy on petrol due to the overwhelming outcry of Kenyans over the soaring cost of living.
According to Al Jazeera, Kenya’s energy regulatory body, the Energy and Petroleum Regulatory Authority (EPRA), announced that oil marketing companies will receive compensation from the Petroleum Development Fund.
The regulator has directed that the uppermost retail cost for a liter of petrol remain steady at 194.68 shillings ($1.35) throughout the upcoming month. This measure aims to protect consumers from a potential rise of 7.33 shillings ($0.05).
It is not yet clear how the Nigerian government intends to implement its own. some believe that the plan includes stabilizing the naira in the FX market and by extension – offering oil importers subsidized FX rates.
Tinubu has called for patience, promising to remain transparent about the issues, including foreign exchange illiquidity due to past mismanagement of the Central Bank of Nigeria.