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Former President of the Petroleum Engineers Society, Uwakwue, States Tinubu Administration is Subsidizing Petrol by N300 Per Litre

In a recent revelation by SaharaReporters in February, the International Monetary Fund (IMF) has alleged that the Nigerian government, under President Bola Tinubu’s administration, has discreetly reinstated the subsidy on Premium Motor Spirit (PMS), commonly known as petrol. 

This comes despite President Tinubu's announcement in May 2023 asserting that his government had ceased the controversial fuel subsidy program. 

The IMF has persistently urged the Nigerian administration to completely eliminate subsidies for fuel and electricity to address economic inefficiencies. However, contrary to this advice and public declarations, the subsidy appears to remain in place, fostering financial burdens amidst escalating inflation and a rising cost of living.

Further complicating the subsidy saga, Nasir El-Rufai, the former governor of Kaduna State, confirmed that since assuming office in May 2023, the Tinubu administration has continuously subsidized fuel. According to El-Rufai, these subsidies have cost the government trillions of naira. He noted that without these subsidies, petrol prices would likely exceed those of diesel, which already surpass N1,000 per liter in various locations, compared to PMS prices ranging from N600 to N750 per liter.

Adding to the discourse, Joe Uwakwue, former President of the Society Of Petroleum Engineers, detailed the financial implications of these subsidies on Arise News Television's The Morning Show. He explained that the actual landing cost of fuel is around $950 per ton, which would necessitate a pump price of approximately N925 per liter, significantly higher than the current price of N600 to N750. The discrepancy suggests that the Nigerian government and the Nigerian National Petroleum Company Limited (NNPCL), the sole importer of fuel, are subsidizing over N300 per liter to maintain lower retail prices.

Uwakwue elaborated on the calculation, stating, “If you look at the current pump price today, it is roughly N600 on average. To bring it into Nigeria today at $950 per ton would mean a pump price of just over N900. Considering a minimum premium of $10, the pump price should actually be around N925. So yes, we are indeed paying a subsidy.” He estimated the subsidy at about N310 per liter.

When questioned about the source of the funds for these subsidies, Uwakwue clarified that the costs were not being borne by the end-users but were instead covered by the government and NNPCL. He outlined, “Think about it, if the landing cost is above N800, and you add all the distribution expenses, it is reasonable to expect that to sell it without a loss, it should be priced at least at N900.”

These statements from high-profile individuals and institutions highlight the ongoing complexities and transparency issues surrounding the subsidy payments in Nigeria. Despite official statements claiming the end of fuel subsidies, evidence suggests that the government continues to shoulder significant financial burdens to stabilize fuel prices, a move that has substantial economic implications for the nation.

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