Gabriel Ogbechie (rainoil), Chief Executive Offthe federal government now spends N600 billion every month on petrol subsidies. Speaking at the Stanbic IBTC Energy and Infrastructure Breakfast Session in Lagos, Ogbechie stated that the federal government has restarted petrol subsidies following the naira’s devaluation in the foreign exchange (FX) market.
He stated that with current daily usage of 40 million litres and a foreign exchange rate of N1,300, the government’s petrol subsidy per litre ranges between N400 and N500.
“When Mr President came last year, one of the things he said is that subsidy is gone and truly, subsidy was gone because immediately, the price of fuel moved from N200 per litre to N500 per litre,” he told reporters (rainoil).
“At that point, the subsidy was actually gone, because the naira was officially worth anywhere between N450 and N470. But a few weeks later, they consolidated the exchange rates, and the naira officially moved to around N750. At that point, subsidies were resuming.
“Again, depending on the currency rate, we could argue over whether the exchange was N750, N500, or whatever.
“But once the two markets were officially stopped in January of this year owing to a policy, the CBN arrived and the market officially rose to around N1300; at that time, the conversation was over. There was an official subsidy for petrol.
“If you want to know where the fuel should be. Simply look at where diesel is. Diesel costs around N1300, while petrol costs N600. So, off the top of my mind, there is currently at least an N400 or N500 per litre subsidy on petrol.
Rainoil
“If you look at our daily usage, which is roughly 40 million litres per day if you spend N500, it equates to at least N20 billion per day, N600 billion per month, or N7.2 trillion depending on how you look at it. So the petrol subsidy is absolutely back.
According to him, the Nigerian National Petroleum Company (NNPC) is the only fuel importer in the country, demonstrating the continuous existence of subsidies and so, the government should see it as a need to prioritise (rainoil).
Source: Vanguardngr.com
