Festus Osifo, the National President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), has revealed that the Federal Government was still paying subsidy on petrol.
Osifo, who also doubles as the president of the Trade Union Congress (TUC), gave the revelation while appearing on Channels Television’s Politics Today on Friday, October 6, 2023.
This is coming months after President Bola Tinubu announced that the era of fuel subsidy was gone. During his inauguration speech, the President told the nation that the budget he inherited had no provision for fuel subsidy payment beyond May, saying, “Subsidy is gone.”
The pronouncement triggered an instant hike in the cost of the commodity across the nation, with fuel prices now hovering around ₦650.
But, according to Osifo, the Federal Government has reintroduced subsidy payments due to the cost of crude oil in the international market and the falling value of the naira against the dollar.
“They [government] are paying subsidy today,” the PENGASSAN boss said.
“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 for a barrel. But today, it has moved to about $93/94 per barrel for Brent crude. So, because it has moved, then the price [of petroleum] also needed to move,” he added.
Osifo identified the two challenges that must be addressed before the government can effectively stop subsidising petroleum.
“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 maintained.
“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.”
In September, petroleum marketers projected that the price of fuel may rise to ₦900 following the fluctuations in the naira to dollar exchange rates and the surge in the price of crude in the international market.
