The Petroleum Product Marketing Company (PPMC) said that the implementation of full deregulation of the downstream sector of the petroleum industry will save Nigeria the sum of N12 trillion in 4 years.
The expected savings will be made from the removal of payment of subsidy on Premium Motor Spirit otherwise known as petrol, which is consumed by Nigerians.
According to NAN, this disclosure was made by the Managing Director of PPMC, Mr Isiyaku Abdullahi, while speaking at the ongoing 15th Oil Trading and Logistics (OTL) Africa Petroleum Downstream Week 2021 on Wednesday in Lagos.
What the Managing Director of PPMC is saying
Abdullahi said, “At 80 dollars crude oil, 60 million litres daily consumption and N411 to a dollar foreign exchange, Premium Motor Spirit (PMS) underrecovery (petrol subsidy) per litre will be N138 per litre.
“Daily PMS underrecovery will be N8.3 billion. Annual PMS underrecovery will escalate to three million naira.”
The PPMC boss said the savings made from the removal of subsidy on petrol could be channelled to other critical areas such as infrastructure, health care and education adding that the removal of subsidy would make the price of petroleum products in Nigeria at par with its African neighbours and discourage smuggling.
He pointed out that Nigeria is moving towards full deregulation of the petroleum downstream sector following the signing of the Petroleum Industry Act (PIA) and this is expected to attract more investments.
Also, speaking at the occasion, the Group Executive Director, Downstream, NNPC, Mr Adeyemi Adetunji, insisted that prices of petroleum products would be determined by free market under the PIA.
He said: “The PIA has provided an enabling environment to attract investment, ensure fair competition for operators and fair price for consumers and producers to ensure industry stability.
“The fuels market is expanding in view of the emerging gas opportunities. Investors and existing players should seize these opportunities to create value for all stakeholders.”
Some other experts that spoke during the event, harped on the need for the government to demonstrate enough political will to stop the subsidy regime as the inability to fully deregulate the sector was a major impediment to unlocking its huge investment potential in the past five decades.
What you should know
The federal government had announced the abolition of the payment of petrol subsidy, following the deregulation of the downstream sector of the petroleum industry and the signing of the PIA by President Buhari.
However, organized labour has insisted that the federal government must fulfil certain conditions, which includes the provision of palliatives to the masses and assurance of no job losses before the removal of petrol subsidy can be implemented.