TUC President Claims Naira Devaluation, Not Fuel Subsidy Removal, Driving High Petrol Prices

Story Summary:

• TUC President’s Assertion: Festus Osifo, President of the Trade Union Congress (TUC), has stated that the high cost of petrol is due to the devaluation of the naira rather than the removal of the fuel subsidy.
• Impact of Naira Devaluation: Osifo argued that petrol prices would be approximately N350 per litre if the naira had not been devalued, calling devaluation the “ultimate elephant in the room.”
• Unsustainable Exchange Rate: He criticised the current official exchange rate of N1,600 to the dollar as unsustainable, noting that it has led to increased fuel prices.
• Continued Subsidies: Despite recent petrol price hikes, the Nigerian National Petroleum Company Limited (NNPCL) is still absorbing the cost difference, as the current pump price does not reflect market conditions.
• Proposal for Special Forex Rate: Osifo proposed that granting NNPCL a special exchange rate of around N1000 to the dollar could lower petrol importation costs and reduce fuel prices to approximately N600 per litre.

The Trade Union Congress (TUC) has asserted that the high cost of petrol is primarily due to the devaluation of the naira, rather than the removal of the fuel subsidy.

Festus Osifo, President of the TUC, made this statement during an appearance on Channels Television’s Politics Today programme. Osifo contended that petrol would be priced around N350 per litre if the naira had not been devalued, emphasising that “the real issue here is devaluation.”

He further noted that the current official exchange rate of N1,600 to the dollar is untenable and has contributed to the rise in fuel prices. Osifo, who also serves as President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), highlighted that despite the recent increase in petrol prices, the Nigerian National Petroleum Company Limited (NNPCL) continues to subsidise by covering the price difference, as the current pump price does not reflect market conditions.

Osifo called for a special exchange rate regime for the national oil company to better fulfil its role in ensuring national energy security. He suggested that such a rate would allow marketers to purchase petrol from Dangote Refinery at a lower cost, which would, in turn, reduce fuel prices.

“If NNPCL is granted a special forex rate of approximately N1000 to the dollar, the cost of petrol importation would decrease, potentially bringing fuel prices down to around N600 per litre,” Osifo said.