IPMAN Says Fuel Subsidy No Longer Sustainable

The Independent Petroleum Marketers Association of Nigeria (lPMAN), has stated that subsidy on Premium Motor Spirit, popularly known as petrol, is no longer sustainable.

The National Operations Controller of lPMAN, Mike Osatuyi said this on Monday in Lagos.

Osatuyi said this against the backdrop of the ongoing hike in the pump price of petrol in filling stations across the country.

He said the federal government had N20.51 trillion expenditure in the 2023 budget against revenue of N9.7 trillion, leaving a deficit of N10.78 trilliion.

Osatuyi said the government hoped to finance subsidy on petrol up to June 2023 at a cost of N3.6 trillion, using Central Bank of Nigeria (CBN) official rate of N435 to a dollar.

“At present, the CBN official rate is hovering around N445 to a dollar which is above the N435 to a dollar projected in the 2023 budget,” he said.

He said the subsidy regime had led to increase in budget deficit and caused borrowing setbacks to the economy.

He also said subsidy had made smuggling of petrol a thriving business because of the huge profit involved.

“Subsidy regime does not allow competition, while monopoly is the language of petrol business as the Nigerian National Petroleum Company (NNPC) Ltd. is the sole importer, manager and distributor of petrol. Subsidy kills efficiency in the procurement and supply chain of petrol business operations and deprives government of huge revenue,” Osatuyi said.

According to him, total deregulation of the downstream sector of the petroleum industry remained the solution to fuel scarcity.

“But the cost implication of the policy will make the price of petrol too expensive for Nigerians, as deregulation will shift the burden from the government to users of the product,” he said.