Robert Dickerman, the Chief Executive Officer, CEO, and Managing Director of Pinnacle Oil and Gas Limited, has disclosed that the Nigerian Government is still footing a monthly bill of around one trillion naira for petrol subsidy.
Despite President Bola Tinubu’s inauguration announcement of the complete deregulation of petroleum products, this substantial payment continues.
Pinnacle Oil has now highlighted that Nigeria is currently utilizing approximately N1 trillion each month for petrol subsidies.
This revelation was made by Dickerman during a panel discussion in session six of Nigeria’s Downstream Forum, which took place at the recent Nigeria International Energy Summit (NIES) in Abuja.
He remarked that a significant subsidy remains in place, emphasizing that it has played a role in maintaining the product’s affordable pricing and potentially fueling smuggling activities into neighboring countries.
“Foreign investors, foreign lenders, and government-operated DFIs have been vocal about their expectations: a prudent fiscal policy, anti-corruption measures, the promotion of competitive markets, and the enforcement of market fairness through policy, regulation, and contract enforcement. Bearing that in mind, I’d like to highlight that a substantial subsidy still persists in PMS, albeit in the FX segment of PMS Price, not in the global price denominated in dollars.
“The repercussions of this subsidy include the fact that gasoline costs in Nigeria are the lowest in Africa by a considerable margin, thereby incentivizing smuggling activities that further strip Nigeria of its worth.
“The act of smuggling causes Nigeria to unknowingly subsidize its neighboring countries while the domestic economy grapples with hardships. The financial burden adversely impacts both the Federal and State budgets, hindering the funding of crucial programs to sustain this subsidy, currently estimated at around 1 trillion Naira per month.
“In addition, with this subsidy still intact, discontinuing payment would lead to a shortage of petrol supply in the absence of refineries producing gasoline. Since all supplies are sourced from the international market, they would only be available at prevailing market rates.”