FG still paying fuel subsidy, PENGASSAN reveals

Festus Osifo, the National President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), has asserted that the Federal Government is still providing subsidies for petroleum products.

In contrast to President Bola Tinubu’s declaration during his inauguration that the era of subsidies was over, Osifo, who also holds the position of President of the Trade Union Congress (TUC), explained that the government continues to subsidize petroleum due to the interplay of factors like the cost of crude oil in the international market and the exchange rate between the dollar and the naira.

During an appearance on Channels Television’s “Politics Today,” Osifo noted that, despite previous claims to the contrary, subsidies persist. He emphasized that this is a direct consequence of the fluctuating price of crude oil on the global market, which has risen from approximately $80 per barrel to about $93 to $94 per barrel for Brent crude.

To terminate the practice of subsidizing petroleum, Osifo highlighted two essential prerequisites. Firstly, he argued that effective management of the exchange rate is vital. If the exchange rate stabilizes, the need for subsidies would diminish. Secondly, the government must ensure a steady supply of petroleum to keep prices stable.

The fuel subsidy has remained in place for many decades, artificially keeping petrol prices low in Nigeria. This was often viewed by Nigerians as one of their benefits from government. However, this policy incurs substantial annual costs for the country, despite Nigeria’s status as a major petroleum producer. The nation still imports most of its fuel because of the lack of functional refineries.

Acknowledging the challenges that arose following the removal of subsidies, President Tinubu introduced a set of measures in July aimed at mitigating the impact on the Nigerian population.