•Gas stations to cushion the effect of removal of subsidies, since the PMS can be sold for N750/liter
•NARTO wants to end the subsidy, NLC will meet with the incoming government on the elimination date
Oil marketers have written to the Federal Government about their proposal to build around 30,000 service stations to cushion the effects of the proposed removal of subsidies on Premium Motor Spirit, popularly called gasoline.
Nigerians are currently counting down to June 2023, the projected date for the removal of the subsidies, as the call for relief to ameliorate the impact of the suspension of the subsidies is gaining momentum.
There are also projections that gasoline can be sold for around N750/litre if the Federal Government removes the subsidy by June this year.
To help cushion this, the oil traders, in a letter to the Federal Ministry of Finance, also requested the Federal Government to make the Central Bank of Nigeria release the intervention fund of N250bn for the National Gas Expansion Program as loans. to the vehicle owner to purchase the gas conversion. equipment.
This came as organized labor stated that they were considering a meeting with the incoming government on the date of removing the subsidies.
In the letter from the oil trading companies, dated April 3, 2023, and received by the Ministry of Finance and Federal Public Credit that same day, the trading company stated that they were ready to deploy gasoline pumps at 30,000 gas stations nationwide to cushion the impact of the fuel subsidy. elimination.
The letter, which was signed by the national president of the Nigerian Independent Oil Traders Association, Chinedu Okonkwo, and addressed to the finance minister, read in part: “We are writing to request a hearing with you to present a palliative solution for cushion the impact of removing the unsustainable gasoline subsidy.
“Our partners, Gas Analytics & Solutions Ltd, have an agreement with the Nigerian Petroleum Marketers Association to locate natural gas dispensers in our network of over 30,000 filling stations in Nigeria.
“This collaboration with IPMAN presents the most economical and convenient platform to implement the necessary infrastructure to support a rapid national deployment of CNG (compressed natural gas) for vehicles.”
IPMAN expressed its belief that this platform would provide a cushion for Nigerians from the impact of high gasoline prices once the subsidy is removed and would significantly reduce the need for foreign exchange to import gasoline.
“In addition, CNG emits 30 to 60 percent less greenhouse gases than gasoline and diesel, making it more attractive for attracting additional funding from international and regional development finance institutions that are willing to support natural gas utilization projects compared to oil refineries.
In addition, the Nigerian Midstream Downstream Petroleum Regulatory Authority and the Nigerian Gas Aggregation Company have established a joint working committee to provide natural gas permits, approvals and feedstock as required.
“What remains is the support of the Central Bank of Nigeria to provide access to the Gas Expansion Fund for vehicle, Keke and truck owners to access loans to finance the acquisition of natural gas conversion kits,” the traders stated. of oil.
IPMAN said it had applied to CBN through microfinance bank NIRSAL for a partnership to develop a financial scheme for qualified Nigerians to access the gas expansion facility to convert their vehicles and they need the support of the federal ministry to conclude with CBN NIRSAL. Microfinance Bank.
He said the Gas Expansion Fund was designed to support the increased use of natural gas in Nigeria, and access to the funds by qualified vehicle owners would support and justify IPMAN members making the required investment throughout the natural gas value chain to deliver gas to vehicles.
“Without a large group of CNG customers, IPMAN will not be able to raise the necessary funds to install CNG service stations.
“We believe that, with the support of the Ministry of Finance, IPMAN’s partnership with Gas Analytics will provide a platform that, in a few months, can cushion the impact of the removal of gasoline subsidies and significantly reduce the need for foreign currency for import gasoline.
“We request a hearing with you to discuss this further and present our proposal. We look forward to hearing from you soon. Thank you for your time and consideration,” the oil traders stated through their general association.
In August 2021, the Federal Government claimed to have started the implementation of the CBN N250bn intervention fund for the National Gas Expansion Program.
The then Permanent Secretary of the Federal Ministry of Petroleum Resources, Bitrus Nabasu, had stated that the process of receiving applications from potential beneficiaries to access the facility had begun.
The intervention mechanism for the NGEP aims to stimulate financing of the critical sector and motivate investment in the gas value chain, and is being financed by the CBN.
Nabasu had stated that the fund was available to finance the establishment of small-scale gas processing plants and petrochemical plants, gas cylinder manufacturing plants, modular CNG regasification systems, component manufacturing plants or automatic conversion kits. , CNG primary and secondary compression stations, as well as micro distribution points and service centers for the sale of liquefied petroleum gas.
Work, FG to meet
Meanwhile, the Nigerian Labor Congress said it would engage the incoming administration after its inauguration to discuss the way forward regarding the fuel subsidy regime.
NLC vice-president Adewale Adeyanju, in a telephone conversation with PUNCH in Lagos on Monday, said the union had not yet ruled on removing the subsidy.
He added that the union was waiting for the administration headed by Bola Tinubu to be sworn in before committing to the government.
“The union of workers under the NLC has not made its position known on the elimination of the subsidy. It’s always a market for the big boys, so the NLC hasn’t come out. And the incoming administration as well, they haven’t met with us, they haven’t discussed anything with us. We are still waiting for them to come in.
“They have not discussed anything with us that has to do with the elimination of the fuel subsidy. So there is no how I am going to comment on that, instead of waiting until the new government is sworn in, then we should sit down with them and come up with ideas that will be good for Nigerians,” Adeyanju said.
He dismissed the charge that the All Progressives Congress was accusing the union of opposing the removal of the subsidy.
“I don’t think APC is accusing NLC of opposing the removal, we haven’t met. They’re just using it for their own self-interest because, to me, I don’t think congress has made any statement to remove it or not.
“There is no statement from the union; it’s always up to the politicians to get their way. So it is not known how APC will accuse NLC in this matter because they won the election and they will meet with NLC. So how will they accuse the NLC of not supporting the removal? We have not come out with any statement on the removal of the fuel subsidy,” the NLC official said.
However, he noted that the NLC was saying that “continuing the subsidy will probably collapse the economy. You are in this country and we know what we are all going through. If you have a replacement, it’s better for all of us. That we continue to deceive ourselves that we removed it today and did not remove it tomorrow.
“That they stop deceiving us, that they let us know if we want to die, we are going to die immediately before they deceive us that it is not going to be reduced and it will be reduced. If they remove it, it’s still for the good of all Nigerians and if they don’t remove it, it will be from the other side as well, but I know we’re going to pay more.”
NARTO demands the elimination of subsidies
Also speaking on the subject, the National Association of Highway Transport Owners called for the immediate suspension of the payment of the gasoline subsidy.
“For us, we support the total deregulation of the downstream oil sector and we will appreciate if the government can do it immediately.
“This is because if there is full deregulation, our freight rates will be paid instantly, compared to the current situation where we wait until the government reimburses us,” stated NARTO President Yusul Othman.
Elaborating further on how removing the subsidies would ensure immediate payment of freight rates, Othman said: “Right now, we are working on credit. You load your truck, make all the necessary payments yourself, go and unload, after unloading you send your invoice before it is finally paid.
“And the payment will be made after spending two or three months of government bureaucracy. But when there is full deregulation, it is cash and carry, carriers will be paid immediately under a different and better arrangement, rather than working with the government.”
Fearing that the removal of fuel subsidies would cause difficulties in Nigeria, Othman said the situation will improve as things progress.
“Yes, there may be immediate difficulties, but in the long run it will turn out to be good. By the time you look at it now, how many people in Nigeria own private vehicles? The number is very low when compared to the majority who do not have vehicles.
“So we are subsidizing very few people to the detriment of the majority who do not have their own vehicle. Of course, we expect that when the price of fuel goes up, the cost of many things will go up, as public officials argue.
“But the truth is again, how many officials do we have compared to the general public? They’re very few. But the government can use the money to provide better alternative services,” Othman said.