A committee of the Nigeria Governors’ Forum has recommended a fuel price of between N408.5 per litre and N380 per litre as well as the immediate removal of fuel subsidy to save the nation’s economy.
Chairman of the NGF committee on subsidy on petrol and Kaduna State Governor Nasir El-Rufai said this while presenting its report during a virtual meeting of the forum on Wednesday.
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He said the current subsidy regime was unsustainable because smugglers and illegal markets in neigbouring African countries were the beneficiaries.
El-Rufai said Nigeria, like other Organisation of the Petroleum Exporting Countries (OPEC) member countries, agreed to a cut production to keep the prices high but that Nigeria could not fully benefit from the regime because of subsidies.
“Between N70bn and N210bn is estimated to be spent every month to keep gasoline price at N162 per litre, this is below the cost price and the remittance to the federation account will shrink to less than N50bn per month or even zero if threats persist.
“We are already at zero. I understand for tomorrow, so this scenario has occurred.
“Why are we keeping the price at N162? We are keeping the price because the Federal Government and trade unions met and agreed to the suspension of some industrial action months back.
“Even though we all supported deregulation of petroleum products prices last year, this agreement was suspended by the Federal Government because of a threat of industrial action by unions. This is the root of the problem and now we are back to losing between N70bn to N210bn per month,” El-Rufai said.
He said in the 2021 budget the Nigerian National Petroleum Corporation (NNPC) had committed to remitting a minimum of N120bn per month to the federation account, but it had been unable to do so, adding that only about 12 states consumed two-thirds of the petrol, which was heavily subsidised.
The committee recommended N408.5 litre as the appropriate price in the circumstance but that with concessions to labour unions, N380 per litre could be the minimum.
“The committee recommends PMS pump price increment from the current N162per litre to N408.5 per litre (negotiations with organized labour unions). N380per litre (settlement with organized labour),” he said.
