HomeNewsSubsidy Not Gone, Now ₦‎600bn Monthly, Rainoil Owner Ogbechie Says

Subsidy Not Gone, Now ₦‎600bn Monthly, Rainoil Owner Ogbechie Says

CEO of Rainoil Limited, Gabriel Ogbechie, has said that the Federal Government has resumed the payment of the controversial fuel subsidy following the devaluation of the Naira in the foreign exchange market.

Gabriel Ogbechie

His position tallies with that of former Kaduna State’s Governor Nasir El Rufai who said in Maiduguri on Monday that the Federal Government was spending more on petrol subsidy than before.

At his inauguration on May 29, 2023, President Bola Ahmed Tinubu pronounced, fuel “subsidy gone.”

However, Ogbechie insisted the contrary was the case, on Tuesday during the Stanbic IBTC Energy and Infrastructure Breakfast Session held in Lagos.

Pointing out that with Nigeria’s daily fuel usage at 40 million litres and the foreign exchange rate at N1,300, the government’s subsidy per litre of fuel fell between N400 and N500, culminating in a monthly total of approximately N600 billion.

“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 litre. At that point truly, subsidy was gone.

“During that period, Dollar was exchanging for N460, but a few weeks later, the government devalued the exchange rate. And Dollar moved to about N750. At that point, 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 is at least N400 or N500 litres subsidy on petrol today. If you look at our daily consumption, say 40 million litres, and we’re spending N500 per litre, that is about N20 billion every day, N600 billion every month and 7.2 trillion yearly depending on how we look at it. So, subsidy is definitely back on petrol,” he said.

Furthermore, he said that NNPC being the only petrol importer in the country implies that there is an ongoing subsidy, as prices had to be fixed.

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

In addition, the Special Adviser to the President on Energy, Mrs. Olu Veŕheijen, said that the Federal Government reserves the right to pay fuel subsidy intermittently to cushion hardship in the country.

“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,” she said.

On its part, however, NNPC has insisted that no subsidy is paid to its account from the federal government.

Addressing the issue in August 2023, the GCEO of the oil firm, Mele Kyari, stated that the company is only recovering the cost of import, adding that the federal government hasn’t paid a subsidy since May.

“I told you there’s no subsidy whatsoever, we are recovering our full cost from the products that we import. We sell to the market, we understand why the marketers are unable to import. We hope that they do this very quickly and these are some of the interventions the government is doing. There is no subsidy.” Kyari said.

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