The Nigerian Governors Forum at its virtual meeting yesterday accepted the recommendation put forward by a committee headed by Kaduna State Governor, Mallam Nasir el-Rufai which was set up to look into the dwindling revenues of states.
The recommendation backs the full deregulation of petrol and suggests that the pump price of the product should drift around N385 per litre.
The Nigerian governors are eager on equating pump price to float with global oil prices owing to the fact that the country can barely keep up with a subsidy regime to keep fuel price stable.
A year ago, Nigeria deregulated its downstream oil sector due to the effects of the COVID-19 Pandemic on the global price of oil and made the Nigerian National Petroleum Corporation the country’s sole petrol importer. NNPC revealed that it bore the burden of spending between 100 billion-120 billion naira a month on petrol subsidies for consumers. This became a heavy burden.
Last year, the government announced that petrol prices will move with the market while subsidies will be eliminated; it would maintain control through a pricing mechanism. The rise in oil prices, however, has triggered countless issues including the cost of petrol imports, rise in inflation and social unrest amongst others.
Some governors have endorsed the new recommendation and others have opposed it but the report is subject to final approval by the National Economic Council. A communiqué released after the virtual meeting showed that governor El-Rufai revealed that at least 70 billion naira is spent on a monthly basis to subsidize the petrol price at N162 per litre. El-Rufai labelled the situation as “unsustainable”.
The committee made a few recommendations, which include the purchase of 113 buses to cushion the effect of the price increase and sale of the three refineries after rehabilitation.