President Bola Tinubu’s announcement to end petrol subsidies has led to a significant increase in petrol pump prices in Nigeria, soaring from an average of N195 per litre to approximately N600 per litre (US$1.3 per litre). Consequently, transport fares have doubled, and long queues have formed at filling stations.
Several regulatory agencies and marketers’ associations have responded to these developments. Farouk Ahmed, the CEO of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), supported the subsidy removal, stating that it aligns with the Petroleum Industry Act (PIA), and the authority will not impose any price cap on the products’ sale. Mele Kyari, the GCEO of the Nigerian National Petroleum Company Limited (NNPCL), also endorsed the removal, emphasizing its potential to enhance the company’s operations. However, the Independent Petroleum Marketers Association of Nigeria (IPMAN) expressed dissent, calling for wider consultation and refinery operations before the removal.
Analysts argue that the president’s declaration in the inauguration speech effectively implements a subsidy removal policy, evident from the doubling of petrol pump prices by marketers, including the NNPCL, even before the official removal. This contradicts the recent government stance of maintaining the subsidy until the scheduled end of June. The conflicting messages and uncertainty within the system are anticipated to exploit Nigerians, exacerbate inflationary pressures, and discourage investments in the sector.
To ensure system stability, downstream regulators must intervene decisively by providing the necessary pricing template as stipulated in Section 206(2) of the Petroleum Industry Act (PIA).
