Despite the inability of local refineries to resume operation, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has given the Federal Government the go-ahead to remove the Premium Motor Spirit (PMS) petrol subsidy.
Its President, Comrade Festus Osifo confirmed the position of the association while speaking with reporters at its National Executive Council Meeting in Abuja.
“Yes,” he responded when asked whether PENGASSAN supports subsidy removal in absence of operational local refineries.
The President stressed “Today there are few things that must be considered.”
He explained that since the crude oil which constitutes about 90% of the product cost is sold at international price, the difference between imported and locally produced petrol will be negligible.
The unionist explained that PENGASSAN reason for requesting that local refineries should be functional is not necessarily for lower petrol prices but for job creation and deepening of the sector’s value chain.
Osifo said: “Today if you look at the cost of importation of PMS and even the cost to produce locally because the primary source is crude and that crude is sold at international price.
“The crude cost contribute over 80 to 90% of the overall PMS cost. So it will not necessarily bring down the price.
” So the reason we are agitating that the refineries should be working is practically because we want more jobs to be created and we want the value chain to be deepened.”
Osifo, who dismissed reports that the PMS will hit N750 per litre, said that calculation was based on a black market exchange rate.
He noted that since Nigerian National Petroleum Company Limited (NNPCL), which is the sole importer of petrol uses official exchange rate, the product will sell in the neighborhood of N360 to N400 per litre.
Noting that the Federal Government has 20% stake in Dangote refinery, he advised it to buy more stake in the entity to further guarantee the nation’s energy security.
Osifo said with NNPC in the saddle, the country cannot run short of petrol even in a fully deregulated regime.
He projected that the Dangote refinery which is already doing pre-commissioning will start refining in June.
According to him, the private refineries like Dangote are reluctant to commence production because of the lingering subsidy regime.
The PENGASSAN President was emphatic about the association’s aversion for outright sale of the national refineries.
He however, admonished the government to adopt the Nigerian Liqufield Natural Gas (NLNG) model to shed the refinery shares to private investors.
Asked what palliatives the government was putting in place of subsidy removal, Osifo said the fund could be channelled to infrastructure such as roads or even spend on settling the university lecturers to prevent them from incessant strike.
He said such palliatives are more durable, noting that some Petroleum Trust Fund (PTF) projects are still beneficial to the country over two decades after the wind down of the scheme.
