FG pays N600bn monthly on fuel subsidy – Rainoil CEO

Onwubuke Melvin
Onwubuke Melvin

The CEO of Rainoil Limited, Gabriel Ogbechie, has declared that the federal government has resumed the payment of subsidy on petrol following the devaluation of the Naira in the foreign exchange market.

This disclosure was made in a statement by Ogbechie during the Stanbic IBTC Energy and Infrastructure Breakfast Session held in Lagos on Tuesday, according to nairametrics.

According to him, the government subsidy per litre of fuel is between N400 and N500, which is estimated to be N600 billion, with Nigeria’s daily fuel consumption of 40 million litres and the foreign exchange rate of N1,300.

he said, “When Mr. President came May last year, one of the things he said is that Subsidy is gone. And truly subsidy was gone because immediately the price of fuel moved from 200 to 500 per liter. At that point truly, subsidy was gone.

“During that period, the Dollar was exchanged for N460, but a few weeks later, the government devalued the exchange rate. And the Dollar moved to about N750. At that point, the subsidy was beginning to come back.

“The moment the two markets officially closed, officially the market went to about N1,300. At that point, that conversation was out of the window. Subsidy was fully back on petrol. If you want to know where petrol should be, just look at where diesel is. Diesel is about N1,300 and petrol is still selling for N600.

“So I can tell you for free that there there is at least N400 or N500 liters subsidy on petrol today. If you look at our daily consumption, say 40 million liters, and we’re spending N500 per liter, that is about N20 billion every day, N600 billion every month and 7.2 trillion yearly depending on how we look at it. So, the subsidy is certainly back on petrol.”

In addition, he said that the fact that NNPC is the only importer of petrol in the country implies that there is an ongoing subsidy since the prices had to be fixed.

He added “And if you look at it, NNPC remains the sole importer of petrol in this country because there is a subsidy on petrol so the price has to be pegged.”

Recall, former governor of Kaduna State yesterday said, the federal government now spends a lot more on petrol subsidy than before.

Meanwhile, the Special Adviser to the President on Energy, Mrs. Olu Veijen, told journalists that to mitigate hardship within the country, the Federal Government reserves the right to pay fuel subsidies intermittently.

She noted “The subsidy was removed on May 29. However, the government has the prerogative to maintain price stability to address social unrest. They reserve the right to intervene.

“If the government feels that it cannot continue to allow prices to fluctuate due to high inflation and exchange rates, the government reserves the right to intervene intermittently and that, does not negate the fact that subsidy has been removed.”

However, the NNPC claimed that the federal government did not pay any subsidy to its account.

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