NIGERIA’S MONTHLY PETROL SUBSIDY HITS N1 TRILLION - PINNACLE OIL BOSS

Despite the deregulation efforts, Pinnacle Oil and Gas Limited, a local player engaged in the entire downstream value chain, has revealed that Nigeria is presently bearing a monthly petrol subsidy burden of approximately N1 trillion.

Speaking at the Nigeria International Energy Summit (NIES) in Abuja during panel session six of the Downstream Forum, the company’s Managing Director/CEO, Mr. Robert Dickerman, highlighted the persistent subsidy as a reason for the affordability of petroleum products, leading to smuggling activities to neighboring counties. 

Dickerman underscored Nigeria’s historical trend of prioritizing oil and gas over other economic and social programs, resulting in underinvestment in local production, manufacturing, and value-added activities.

He argued that the emphasis on palliatives such as fuel and food subsidies has hindered the development of crucial sectors like infrastructure, education, and healthcare.

This, in turn, has contributed to a substantial negative trade deficit, insufficient bank capitalization, and a need for foreign investment.

The CEO stressed the importance of attracting foreign investment and outlined key expectations from investors and lenders: a conservative fiscal policy, anti-corruption measures, competitive markets, and fair market enforcement through policy and regulation.

Despite the ongoing subsidy in Premium Motor Spirit (PMS), Dickerman clarified that it is in the foreign exchange (FX) portion of the PMS price, not the global dollar price.

He outlined the repercussions of the subsidy, including Nigeria having the lowest gasoline cost in Africa, encouraging smuggling and causing financial strain on the national budget.

The monthly cost of the subsidy, estimated at 1 trillion Naira, poses challenges to funding critical programs.

Furthermore, the lack of competition in bulk supply due to a government-owned national champion importing exclusively at subsidized prices discourages foreign investors from entering the sector.

In conclusion, Dickerman emphasized the need for a national policy transformation to accommodate and encourage Foreign Direct Investment (FDI), emphasizing the urgency of addressing long-term issues over short-term palliatives in Nigeria’s economic landscape.