Chinedu Okonkwo, the National President of the Independent Petroleum Marketers Association of Nigeria, expressed, "Right now they (the government) are making money. At least with this removal of subsidy, the government has racked in hundreds of billions, whether in naira or dollar. This is because every month we know how much they lose before."
According to industry insiders, there is a possibility of a petrol price increase in July due to the recent floating of the naira against the United States dollar by the Federal Government. The Central Bank of Nigeria took the step of unifying the country's exchange rates into the Investors and Exporters window on June 14, 2023. This move allows market forces to determine the exchange rate, which can have a direct impact on the cost of petrol.
Operators in the downstream oil sector have indicated that Nigeria has saved significant amounts since ending the subsidy regime in May. The Nigerian National Petroleum Company Limited (NNPCL) revealed the substantial monthly expenditure on subsidies, which further highlights the positive impact of subsidy removal.
Mele Kyari, the Group Chief Executive Officer of NNPCL, had earlier stated during a meeting with oil sector operators in February, "In computation, N202 multiplied by 66.5 million litres, multiplied by 30 will give you over N400bn of subsidy every month."
Regarding petrol imports by independent marketers, Chinedu Okonkwo mentioned that discussions were underway among oil dealers. He stated, "We are holding meetings with a lot of people who are interested in commencing PMS imports. We are not resting on our oars about this."
While Okonkwo acknowledged that petrol prices could be affected by forex rates, he argued that the removal of subsidy would not solely result in continuous price increases. He emphasised that market fundamentals would determine pricing and capping. Okonkwo further explained, "Therefore the floating of the naira at this time that Nigeria is beginning to make savings is not going to be a fixed thing. The exchange rate will also move up or down depending on how we manage our crude oil, which is our foreign exchange earner. And this will result in cheaper fuel."
Billy Gillis-Harry, the President of the Petroleum Products Retail Outlets Owners Association of Nigeria, noted that the cost of PMS would respond to the exchange rate. He acknowledged that while the current forex rate could lead to higher petrol prices, the expectation with the President Bola Tinubu-led government was that the exchange rate would decrease in the future.
Gillis-Harry also shared plans for his group to start importing petrol. He revealed that PETROAN was working on obtaining the necessary import license while simultaneously negotiating with the government on the process of revitalising the refineries.
In response to the removal of subsidy on PMS, organized labor has called on Nigerians to exercise patience as negotiations with the Federal Government continue. Tommy Etim, the National Vice-President of the Trade Union Congress and a representative of organized labor in discussions with the government, emphasized that labor unions were actively engaging with the government to ensure the distribution of favorable palliatives to Nigerians.
Etim urged Nigerians, especially workers, to view the ongoing situation as a collective sacrifice that will lead to a collective bargaining agreement benefiting the interests of all. He stated, "Whatever we are facing now is a collective sacrifice, and there is hope that we will not allow the pressure for those who have eaten fat on the so-called subsidy to frustrate our negotiations. Let Nigerians see whatever is happening as a collective sacrifice that all Nigerians will be happy."