Nigeria’s unsustainable fuel subsidy, which has been sapping the country of trillions of naira a year, has been called into question by the Major Oil Marketers Association of Nigeria (MOMAN).
According to the proposed fiscal strategy paper for 2023 through 2025 that Minister of Finance, Budget & National Planning, Zainab Ahmed, unveiled to the country, maintaining the subsidy will cost Nigeria over N7 trillion in 2023.
The Federal Government has no choice but to discontinue the subsidy, according to MOMAN, despite the fact that doing so would be “very difficult” in light of the current economic climate.
“Energy Transition, PIA, Petroleum Pricing, and the Way Forward for the Downstream Sector” was the themes of Adeosun’s speech.
He stated: “It is something that must be done as there are no more viable options. We are told that this year the subsidy bill to the Federal Government may be between N5 trillion and N6 trillion. Clearly, Nigeria cannot afford this.
“To wean Nigeria off this subsidy, a lot of investment must be done to sensitize Nigerians in convincing them, and in finding alternatives.
“We need to begin to remove the subsidy and mitigate the pains Nigerians will feel when petroleum prices begin to manifest their true value.”
Olumide Adeosun said marketers were optimistic that the industry was headed in the right direction with the enactment of the Petroleum Industry Act (PIA) 2021, which he described as “an excellent piece of legislation.”
He also said, “We are now at the point of implementation, which is taking a bit longer than hoped but this is not necessarily a bad thing.
“The President postponed the implementation of free market pricing, which has caused a slowdown with respect to benefits expected from free competitive open market pricing, such as new investments and subsidy removal.”
The decade of gas, which the federal government declared in January 2021, was, according to Adeosun, the marketers’ firm belief.
However, he continued, the product’s scarcity and the rise in gas costs around the world have made rollout somewhat challenging.
The head of MOMAN stated that because PMS pricing has not yet been fully deregulated, the average Nigerian who was supposed to switch to gas is having difficulty. This is true not only for cooking but also for running cars and generating electricity.
Since the majority of people still rely on inexpensive PMS for their automobiles and generators, it creates an anomaly and presents an extra hurdle for the adoption of gas.
Although the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has a significant role to play in directing our destiny, the market is ultimately the best regulator, in his opinion.
“The market regulates prices; if you are too expensive people will not buy from you. The market regulates quality as well as customer service. The market also rewards the best in class.
“We need to move to an era of transparency and information dissemination. Energy correspondents need to share as much information as possible with the market and public with respect to cost prices, quality, product specifications, customer service and pump prices. That is the best regulation you can ask for,” he said.