The National President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Festus Osifo, has said that the Federal Government is still paying subsidy on petroleum.
POLITICS NIGERIA reports that this comes despite President Bola Tinubu’s declaration in his inauguration speech that the subsidy era was gone.
Osifo, who is also the President of the Trade Union Congress (TUC), said that due to the cost of crude oil in the international market and the dollar-to-naira rate, the government still pays subsidy for the product.
“They [government] are paying subsidy today,” he said on Channels Television’s Politics Today on Friday.
“In reality today, there is subsidy because as of when the earlier price was determined, the price of crude in the international market was somewhere around $80 for a barrel. But today, it has moved to about $93/94 per barrel for Brent crude. So, because it has moved, then the price [of petroleum] also needed to move,” the PENGASSAN boss added.
Osifo said the only way for the government to stop subsidising petroleum is to manage the exchange rate effectively and increase the supply of fuel.
“The only reason the price will not move is when you are able to manage your exchange rate effectively and you are able to pump in supply and bring down the exchange rate,” Osifo maintained.
“So, if the exchange rate comes down today, we will not be paying subsidy. But with the exchange rate value and the price of crude oil in the international market, we have introduced subsidy.”
The fuel subsidy has existed for some time and kept petrol prices artificially low. However, the measure costs the country billions annually, and its governments have promised to end it, including Tinubu. He eventually declared it ended, leading to a sharp increase in the commodity.
The president acknowledged the challenges facing Nigerians in the wake of the subsidy removal but, in July, rolled out measures to cushion the impacts.
To “reduce the burden”, he pledged at least $264 million for agriculture, $165 million for small and medium-sized businesses, and $99 million for manufacturing.
“In the short and immediate terms, we will ensure staple foods are available and affordable,” he said.
