‘How Nigeria spent over ₦10tr on fuel subsidy in 12 years’
By Tunde Shorunke
Not less than ₦10 trillion has been spent by the Federal Government on subsidising Premium Motor Spirit (PMS) in the past 12 years.
In an exclusive telephone conversation with Daily Times, the Executive Secretary of Major Oil Marketers Association of Nigeria (MOMAN), Clement Isong, said that the decision to deregulate was founded essentially on the challenges the country has with respect to the efficient allocation of resources.
He pointed out that in any given year like 2019, Nigeria spent over ₦1 trillion which could have been used for other basic things.
According to him, “If we could look at the budget, and we see how much was spent on education, health, infrastructure or agriculture, the budget allocated for these are nothing less than ₦200-300 billion compared to the amount of subsidy we payout.
“It does not really make sense for a country to burn away over a trillion naira on something that today fixes itself and gives us nothing tomorrow.
“If we could have invested that kind of money on education, we would have a future for our children, if we could have invested that money on health, we would have been more equipped to face COVID-19 today, if we could have invested that money on transportation, we would have been able to manage transportation better in the country.”
Explaining further, he said, “So, unfortunate for the post-COVID-19 economy, the country can no longer afford to pay subsidy which gives us no options because it’s not that we could afford it that we have changed our mind but we could not.
“What this means is that, as long as the petroleum refineries are not working, all petroleum products will be imported into Nigeria and as the country cannot afford to subsidise it, the pump price will reflect the true market price.”
He said that Nigeria was currently challenged by the low cost of crude oil, which has reduced significantly the content of foreign exchange (FX) available to the country.
“So what you find is because there’s simply not enough FX the country will struggle to import anything and everything. So, currently, where we found ourselves it is still only NNPC that is importing petroleum products.
“In an idle situation is for everybody to have access to FX which is how deregulation should work, for people to have equitable access to foreign exchange for competition. And it’s a competition that makes a deregulated market efficient.
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So, unfortunately, because there’s no access to FX only NNPC is importing right now. And everybody buys Premium Motor Spirit (PMS) from NNPC.
The Petroleum Product Pricing Regulatory Agency (PPPRA) had previously determined a pricing template under which they provide a price band for petroleum products of what prices it should be sold at,” he added.
