FG Saves ₦400 Billion In A Month After Subsidy Removal

Oil marketers said the Federal government has been able to save about ₦400 billion since the subsidy was removed for petroleum products.

Recall that the announcement to remove petroleum subsidy from premium motor spirit, PMS was made during President Bola Tinubu’s inauguration on May 29, 2023, and since then, there have been some major changes in the industry especially as it concerns product prices.

According to the National President, of the Independent Petroleum Marketers Association of Nigeria, (IPMAN) Chinedu Okonkwo, the FG is currently making lots of money as it was no longer spending massively for subsidy payments monthly.

FG Saves ₦400 Billion In A Month After Subsidy Removal

“At least with this removal of subsidy, the government has racked in hundreds of billions, whether in naira or dollar. This is because every month we know how much they lose before,” he said

Okonkwo also said the actual figure the FG paid as subsidy amounts every month was disclosed by the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, (NNPCl), Mele Kyari, during a meeting with oil sector operators in February 2023.

At the meeting, Kyari had told industry stakeholders that the landing cost of PMS imports into the country was around ₦315/litre according to the provisions of the Appropriation Act.

The NNPC boss went on to explain that products were transferred to the marketers at ₦113/litre.

Accordingly, a difference of ₦202 for every litre of PMS imported into the country was taken off. When the amount is multiplied by 66.5 million litres which is roughly the amount of PMS used daily and then multiplied by 30 days, it revealed about ₦400 billion was spent on subsidies every month.

Just after the subsidy removal announcement, the Central Bank of Nigeria, (CBN) followed suit with the unification of the naira on June 14, 2023, a move which has set the pace for market forces to determine the exchange rate.

The naira unification has also caused a high possibility for PMS prices to increase.

The IPMAN Chairman, however, noted that even though FX was a major determinant of petrol price, the removal of subsidy will not cause the continuous increment of PMS prices.

BY IYABO AINA

Publisher Of News Rain Nigeria