The Major Oil Marketers Association of Nigeria (MOMAN) has lent its voice to end Nigeria’s unsustainable oil subsidy, which has gobbled up billions of naira every year.
Maintaining the subsidy will cost Nigeria nearly 7 trillion naira in 2023, according to the draft fiscal strategy paper for 2023 to 2025, which the Minister of Finance, Budget and National Planning, Zainab Ahmed, unveiled to the nation.
MOMAN said ending the grant would be “extremely difficult,” but the federal government had no other choice in light of current economic realities.
MOMAN Chairman Olumide Adeosun publicized them at the Association of Nigerian Energy Correspondents (NAEC) International Strategy Conference, held today in Lagos.
Adeosun spoke on “Energy Transition, PIA, Oil Pricing and the Way Forward for the Downstream Sector”.
Represented by Clement Isong, the managing director of MOMAN, Adeosun said it would not be easy to take ‘cheap’ petrol from Nigerians.
He said: “It’s something that needs to be done because there are no more viable options. We are told that this year the subsidy bill to the federal government could be between 5 trillion and 6 trillion naira. Obviously, Nigeria cannot afford it.
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“To wean Nigeria off this subsidy, a lot of investment needs to be made in sensitizing Nigerians to convince them and find alternatives.
“We need to start removing the subsidy and easing the pains that Nigerians will feel when oil prices start to show their true worth.”
Adeosun said marketers were optimistic the industry was moving in the right direction with the enactment of the Petroleum Industry Act (PIA) 2021, which he described as “great legislation”.
He said: “We are now in the implementation stage, which is taking a bit longer than expected, but that’s not necessarily a bad thing.
“The President has postponed the implementation of open market pricing, which has caused a slowdown in the expected benefits of competitive open market pricing, such as new investments and the removal of subsidies. .”
Adeosun said traders were confident that the gas decade declared by the federal government in January 2021 was clearly the way forward.
He added that the rise in gas prices around the world and the unavailability of the product had, however, made the roll-out a bit difficult.
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The Chief of MOMAN said, “The ordinary Nigerian who was supposed to switch to gas not only for cooking but also to power automobiles and power generation, is struggling because the pricing of PMS has yet to be fully deregulated.
“This creates an outlier and an additional challenge for gas adoption, as most people still rely on cheap PMS for their cars and generators.”
According to him, while the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has an important role to play in guiding our future, the best regulator is ultimately the market.
“The market regulates prices; if you’re too expensive, people won’t buy from you. The market regulates quality as well as customer service. The market also rewards the best in their category.
“We need to move into an era of transparency and disclosure of information. Energy correspondents should share as much information as possible with the market and the public regarding cost, quality, product specifications, customer service and pump prices. This is the best regulation you could ask for,” he said.