National President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) Festus Osifo has disclosed that the Federal Government is still paying subsidies for petroleum products, despite the claims of subsidy removal.
Gatekeepers News reports that during President Tinubu’s inauguration, he declared that the end of fuel subsidy triggering a hike in the cost of petroleum products across the nation.
However, months after the declaration, Osifo, who is also the President of the Trade Union Congress (TUC), clarified that due to the fluctuating cost of crude oil in the international market and the precarious exchange rate between the dollar and the naira, the government is still subsidising the product.
While on Channels Television’s Politics Today on Friday, Osifo said “They [the government] are paying subsidy today.” He explained further, saying, “In reality today, there is subsidy because as of when the earlier price was determined, the price of crude in the international market was somewhere around $80 per barrel. But today, it has moved to about $93 to $94 per barrel for Brent crude. So, because it has moved, then the price [of petroleum] also needed to move.”
To cease subsidizing petroleum, Osifo outlined two essential conditions that must be met.
“The only reason the price will not move is when you are able to manage your exchange rate effectively and you are able to pump in supply and bring down the exchange rate,” he emphasised.
“So, if the exchange rate comes down today, we will not be paying subsidy. But with the exchange rate value and the price of crude oil in the international market, we have introduced subsidy.”
Fuel subsidies have long been a contentious issue in Nigeria. While they have kept petrol prices artificially low, many Nigerians have regarded them as a significant benefit from the government.
Nonetheless, the practice has cost the country billions annually, primarily because Nigeria, despite being a major petroleum producer, relies on fuel imports due to its inadequate refining capacity.
President Tinubu acknowledged the difficulties facing Nigerians after the subsidy removal but unveiled measures aimed at mitigating the impact in July.
These included pledges of at least $264 million for agriculture, $165 million for small and medium-sized businesses, and $99 million for manufacturing.
In addition, he stated, “In the short and immediate terms, we will ensure staple foods are available and affordable,” and announced the release of 200,000 metric tonnes of grains from strategic reserves to households.
