Subsidy Removal: FG Saves N400bn In One Month

Furthermore, these oil dealers expressed concerns that the cost of petrol might increase in……

By Isa Mubaraq: 

Oil marketers announced on Thursday that since May 31, 2023, when the removal of subsidy on Premium Motor Spirit (popularly known as petrol) was officially implemented, the Federal Government has saved approximately N400 billion.

Furthermore, these oil dealers expressed concerns that the cost of petrol might increase in July due to the recent floating of the naira against the United States dollar by the Federal Government.

The Central Bank of Nigeria took the step of unifying the country’s exchange rates into the Investors and Exporters window on June 14, 2023, allowing market forces to determine the exchange rate. According to operators in the downstream oil sector who spoke to our correspondent on Tuesday, Nigeria has saved hundreds of billions of naira after discontinuing the subsidy regime in May, based on the Nigerian National Petroleum Company Limited’s revelation of the previous monthly expenditure on subsidy.

“Right now they (the government) are making money. At least with this removal of subsidy, the government has racked in hundreds of billions, whether in naira or dollar. This is because every month we know how much they lose before,” the National President, Independent Petroleum Marketers Association of Nigeria, Chinedu Okonkwo, stated.

During a meeting with oil sector operators in February, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, disclosed the amount being spent on subsidy by the company on a monthly basis. Okonkwo informed our correspondent that marketers had been informed about this information by referencing Kyari’s comments.

At the meeting, Kyari had said, “Today, by law and the provisions of the Appropriation Act, there is a subsidy on the supply of petroleum products, particularly PMS imports into our country. In current data terms, three days ago, the landing cost was around N315/litre.

“Our customers are here; we are transferring to each of them at N113/litre. That means there is a difference of close to N202 for every litre of PMS we import into this country. In computation, N202 multiplied by 66.5 million litres, multiplied by 30 will give you over N400bn of subsidy every month.”

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