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Tinubu govt paying ₦1trn monthly as petrol subsidy - Pinnacle Oil MD

The Pinnacle Oil boss said the Federal Government is still paying a massive subsidy, which explains why the product is still being smuggled to neighbouring countries.

Tinubu govt paying ₦1tr monthly as petrol subsidy - Pinnacle Oil MD

According to Robert Dickerman, the Managing Director/CEO of Pinnacle Oil and Gas Limited, President Bola Tinubu administration is currently paying ₦1 trillion monthly as petrol subsidy.

In a bid to deregulate the downstream sector in line with the provisions of the Petroleum Industry Act (PIA), Tinubu announced the end of the subsidy regime during his inaugural speech on May 29, 2023.

The decision instantly led to an astronomical increase in fuel pump prices, which suggested that the government had taken its hands off fixing prices.

However, stakeholders and foreign institutions, particularly the International Monetary Fund (IMF), have argued that, with the depreciation of the naira, the price of fuel per litre should have increased from around ₦600 to over ₦1,000, indicating that the government is surreptitiously paying subsidy on the commodity.

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Meanwhile, speaking during a panel session six on Nigeria’s Downstream Forum at the just-concluded Nigeria International Energy Summit (NIES) in Abuja, Dickerman disclosed that the government is currently paying massive subsidies on petrol.

He said the practice explains why the cost of the product in Nigeria remains the lowest in Nigeria, thus encouraging smuggling to neighbouring countries.

He said, “With legacy monetary policymaking currency exchange difficult, we desperately need Foreign Investment. This is a reality. So the best policy during this time of crisis is a national policy to transform our economy/regulations/laws to accommodate and encourage FDI.

“Foreign investors, foreign lenders and government-run DFIs have been very clear about what they want to see: Conservative fiscal policy, tackling corruption, enabling competitive markets, and enforcement of fairness in markets through policy, regulation and the ability to enforce contracts. Keeping that context in mind, I want to point out that there is still a massive subsidy in PMS, albeit in the FX portion of PMS Price, not the global price in dollars.

“The consequences of this subsidy are: The cost of gasoline in Nigeria is the lowest in Africa by far, which encourages smuggling out, further depriving Nigeria of value. Smuggling causes Nigeria to subsidize neighboring countries even while our economy struggles. The cost is hurting the entire budget, Federal and State, as critical programs cannot be funded to pay this subsidy. It is currently calculated to be about 1 trillion Naira/month, he stated.

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