Oil marketers have said that the federal government’s assurance that the pump price of petrol will not rise beyond N617 per litre implies the funding of subsidy payments.
On Tuesday, the presidency was said to be considering a “temporary subsidy” to prevent additional increases in the price of petrol due to difficulties in preventing more naira falls on the foreign exchange market.
Tope Ajayi, Senior Special Assistant to the President on Media and Publicity, disputed this claim hours later. “There is no condition to support any increase in prices at this time,” he said.
Since then, Nigerian National Petroleum Corporation Limited has secured a $3 billion crude oil repayment loan, which they consider would provide the naira with much-needed foreign market stability.
“This means that if the naira appreciates in value, the cost of fuel will drop, and further increases will be halted and there won’t be any need to pay subsidy on the product,” the federal government argued.
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Over this period, the pump price of petrol has remained constant despite the continuing decrease of the naira versus the dollar. IPMAN spokesperson Chinedu Ukadike explained on Sunday that NNPCL will have no choice but to raise its pump price if the naira continues to fall in value against the dollar.
Mr Ukadide further claimed that if the naira depreciates further on the foreign market to N950 per dollar, the price of petrol could climb to N750 per litre.
In contrast to this prediction, the presidency said that NNPCL will not adjust their pump price, as they have done twice since the removal of the fuel subsidy on May 29.
An executive from a petroleum marketing firm told Punch Newspapers on Friday that the government’s latest behaviour disagrees with their previous position and current market realities.
“No company will bring in petrol and after adding the shipment cost, insurance cost, bridging gap and profit margin and the pump price adds up to N617 and no wells at N565,” he said, adding that the government was omitting some truth from the masses.
“Our ex-depot price as of Monday was N575 and by Thursday, it had jumped to N580. Ideally, we should be selling above N600, say N620 per litre in Lagos, but the Federal Government is saying we can’t increase the pump price, so who pays the differential?”
According to him, all indications point to the resumption of subsidy payments in order to keep the price of petrol below N617 per litre. “Is it not obvious that the government has resumed subsidy payment?”
