The Managing Director/CEO of Pinnacle Oil and Gas Limited, Mr. Robert Dickerman during the Nigeria International Energy Summit (NIES), disclosed that Nigeria is currently spending around 1 trillion Naira every month on petrol subsidies.
He said, “Foreign investors, foreign lenders and government-run DFIs have been very clear about what they want to see: Conservative fiscal policy, tackling corruption, enabling competitive markets, and enforcement of fairness in markets through policy, regulation and the ability to enforce contracts. Keeping that context in mind, I want to point out that there is still a massive subsidy in PMS, albeit in the FX portion of PMS Price, not the global price in dollars.
“The consequences of this subsidy are: The cost of gasoline in Nigeria is the lowest in Africa by far, which encourages smuggling out, further depriving Nigeria of value. Smuggling causes Nigeria to subsidize neighboring countries even while our economy struggles. The cost is hurting the entire budget, Federal and State, as critical programs cannot be funded to pay this subsidy. It is currently calculated to be about 1 trillion Naira/month.
“Also, with this subsidy in place, ceasing subsidy payments would result in no petrol supply, if there are no refineries producing gasoline. All supplies come from the international market which will only sell at market prices.”
According to him, Despite the deregulation efforts, the subsidy remains significant, contributing to the country’s ability to maintain affordable petrol prices. However, it also fuels smuggling activities to neighboring nations, which depletes Nigeria’s resources and also strains the economy, impeding budget allocations for vital programs.
