PENGASSAN confirms return of fuel subsidy

PENGASSAN confirms return of fuel subsidy

The National President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), Festus Osifo, at the weekend, said the President Bola Tinubu led federal government had restored the subsidy on petrol.

He said the move was in contrast with the official government policy of breaking with the subsidy regime since May.

Osifo, who is also the president of the Trade Union Congress (TUC), disclosed this while featured on a live television programme

“The government has to come clean. In reality today, there is a subsidy because as of when the earlier price was determined, the price of crude in the international market was somewhere around less than $80 a barrel. But today, it has moved to about $93/94 per barrel for Brent crude. So, because it has moved, then the price (of petrol) also needed to move,” Osifo said.

President Bola Tinubu had announced the removal of fuel subsidy in his inaugural speech on 29 May.But Osifo said due to the cost of crude oil in the international market and the exchange rate, the government still pays subsidies on petrol.

READ ALSO:

“The speculation has been there looking at the fundamentals because two basic things that contribute to the pricing today are the exchange rate and the price of the crude in the international market.

“You know, in the last few weeks, the price of crude has been going up, and inches towards $95 per barrel. Based on this, there are speculations that there may be an increase in the price of Premium Motor Spirit (PMS) but behind the scenes, we have been engaging the government and trying to make them understand that there is no basis for that.“Because for us, you know when they floated the exchange rate, you would recall that the exchange rate was moving at a very fast speed before some interventions came,” Osifo said.

He also said: “Today the official exchange rate is around N770 per dollar. So, what we have told them is that all international agencies, if you look at JP Morgan, Bank of America, and all, have said that our naira today is undervalued. What that means is that our naira should be exchanged somewhere around N600 to N630 for a dollar.

“And if the government can push it down to that range, then we would be buying PMS (petrol) at a little reduced rate compared to where it is today.“So, we have told the government that there is no basis for us to be buying petrol at a price higher than what we have today. But instead, it should go down. But the controlling factor is the exchange rate so if they could work on the exchange rate. Today it is somewhere around N770 to a dollar. But if the true value comes to bear around N600 to a dollar then we would even buy PMS at a cheaper rate,” he added.