The prevailing high cost of petrol, the Trade Union Congress (TUC), believes, is primarily due to the devaluation of the Naira, rather than the removal of the petrol subsidy in May 2023.
Cmrd. Festus Osifo, TUC president, who made the submission during an interview on Channels TV, Politics Today show, argued that petrol would have been selling at around N350 per litre if the Naira had not been devalued, noting that “the ultimate elephant in the room is devaluation”.
Osifo said the current official exchange rate of N1,600/$ was unsustainable and had led to an increase in fuel prices.
Osifo, who is also the President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), pointed out that, despite recent increase in petrol pump price, the Nigerian National Petroleum Company Limited (NNPCL) continued to provide subsidies by absorbing the difference since the pump price was not market reflective.
To solve this problem, the TUC president called for the granting of a special exchange regime to the national oil company to enable it meet its mandate of providing national energy security.
Said Osifo: “If you give a special rate to NNPC, you don’t need to pay for subsidy anymore”, just as he cited the example of “Dangote Refinery, which was granted a special rate to sell petrol”.
He said that the special rate would enable marketers purchase petrol from Dangote Refinery at a reduced rate, leading to a decrease in fuel prices.
The TUC president, however, called on the Central Bank of Nigeria (CBN) and the Nigeria Customs Service (NCS) to grant NNPC Ltd. a special foreign exchange rate, saying that the “special rate would significantly lower the cost of petrol importation and gradually reduce fuel prices across the country”.
Argued he: “If NNPCL is granted a special forex rate of about N1000/$, the cost of petrol importation will crash, and fuel prices will drop to around N600. per litre”.
The call by Osifo has raised need for greater scrutiny and performance appraisal thus far of the managers of Nigeria’s economy and foreign exchange matrix.