Fuel Subsidy Savings Used to Maintain Pump Prices, Reveals Minister Abubakar Bagudu
Abubakar Bagudu, the Minister of Budget and National Planning, revealed that the Nigerian National Petroleum Company Limited (NNPCL) is utilizing savings from the discontinued fuel subsidy to keep the current pump price steady.
Speaking on Channels Television recently, Bagudu clarified that the 2024 national budget does not include provisions for fuel subsidies.
When questioned about the savings accrued since the removal of the fuel subsidy in June 2023, Bagudu explained that NNPCL’s expenditure on fuel imports exceeds the revenue generated from the current pump prices.
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“The issue is that if NNPCL is expected to contribute significantly, it cannot do so because it has to allocate funds to import fuel. NNPCL is responsible for ensuring energy security, which affects its ability to contribute as expected,” Bagudu stated.
This explanation comes amidst ongoing confusion regarding the government’s position on fuel subsidy payments, despite its removal in June 2023, which led to a sharp increase in fuel prices to over N600 per liter from the previous N238.
One of the key demands of the ongoing #EndBadGovernance hunger protests, now in its third day, is the reinstatement of the fuel subsidy. The protests are expected to continue for 10 days.
Addressing the protesters’ demands, Bagudu assured that the government is paying attention to the concerns of Nigerians and is working on reforms that align with public expectations.
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When asked if NNPCL had remitted any funds to the Federal Government, Bagudu replied, “I am not aware. The Accountant-General would have that information, but I would be surprised if they have done so.
“Let’s be realistic, if you instruct someone to import fuel and the import cost exceeds the selling price, it becomes a challenge. The Petroleum Industry Act designates NNPCL as a private liability company while also charging it with the responsibility for energy security. Therefore, only NNPCL can determine the actual landing cost of fuel in Nigeria.
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“If NNPCL sells fuel below that cost, it bears the loss. Although there is no provision for a fuel subsidy, it does not mean that NNPCL isn’t incurring losses due to the difference between the landing cost and the selling price.
“President Tinubu is listening to Nigerians and is committed to implementing reforms that reflect their concerns.”
It’s worth noting that the Major Energy Marketers Association of Nigeria recently disclosed that the landing cost of fuel stands at N1,170 per liter, while the pump price varies between N617 and N850 per liter, depending on the location.
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