The suitable time to end fuel subsidy totally by the Federal Government and also deregulate the downstream sector is now as the global crude price is at its lowest ebb, economy and energy expert disclosed. The Brent crude at the international oil market benchmark closed around $66.87 per barrel in 2017 raising to as high as $86.74 in October, 2018 which later dropped since then.
Although the prices bounced back in January, 2019 hitting $60 per barrel over the weekend following the OPEC production cuts, the price is foreseen to remain below $80 throughout 2019.
subsequently, an expert has, therefore, call on the government to make use of the opportunity of low oil price to remove fuel subsidy that has continue to consume billions of Dollars from the government budget.
According to this year budget, the Federal Government has set aside N305 billion corresponding to $1 billion, for subsidy on petroleum otherwise referred to under-recovery by the NNPC, an amount which is higher than budget of capital project on education (N47.29bn), Agriculture (N80.29), Water resources (N73.58bn), Health (N50.15bn) put together for 2019 budget.
Dr, Maikanti Baru, the Group Managing Director of NNPC disclosed this. He revealed subsidy on petroleum has dropped to as low as N25/litre, so presenting the government with a golden opportunity to redirect funds mend for subsidy into capital projects.
According to Baru, “NNPC is having much lower crude oil prices and subsidy had also gone down appreciably to the region of N20 and N25 per litre,”
The Petroleum Products Pricing Regulatory Agency (PPPRA), the agency in charge for fixing fuel price, also revealed recently that with the recent drop in the price of crude oil in the international market, it had observed a sliding trend in the Expected Open Market Price of PMS, to be below the government approved pump price of N145/litre.
Apolo Kimchi, the spokesperson of the Agency disclosed, “It is expected that subsidy could be witnessed and if this trend persists, it will enable other marketers to commence importation of petrol,"
Consequently, this current development in the oil market, a cross-section of economy and energy experts are calling on the Federal Government to act now if the decision on removal of subsidy has to be taken.
