Gas stations to cushion subsidy removal effect as PMS may sell for N750/litre

•NARTO wants end to subsidy, NLC to meet incoming govt over removal date

Oil marketers have written to the Federal Government over their proposal to build about 30,000 gas stations to cushion the effects of the proposed subsidy removal on Premium Motor Spirit, popularly called petrol.

Nigerians are currently counting down to the June 2023 projected date for subsidy removal, as the call for palliatives to ameliorate the impact of the halt in subsidy is gaining momentum.

There are also projections that petrol may sell for about N750/litre if the Federal Government removes subsidy by June this year.

To help cushion this, oil marketers, in a letter to the Federal Ministry of Finance, also asked the Federal Government to make the Central Bank of Nigeria release the N250bn intervention fund for the National Gas Expansion Programme as loans to vehicle owner to acquire gas conversion kit.

This came as the organised labour stated that it was considering a meeting with the incoming government on subsidy removal date

In the letter by the oil marketers, dated April 3, 2023, and received by the Federal Ministry of Finance on the same day, the marketer stated that they were ready to deploy gas dispensers to 30,000 filling stations nationwide to cushion the impact of fuel subsidy removal.

The letter, which was signed by the National President, Independent Petroleum Marketers Association of Nigeria, Chinedu Okonkwo, and addressed to the finance minister, read in part, “We are writing to request an audience with you to present a palliative solution to cushion the impact of the removal of the unsustainable petrol subsidy.

“Our partners, Gas Analytics & Solutions Ltd, have an agreement with the independent Petroleum Marketers Association of Nigeria to co-locate natural gas dispensers on our network of over 30,000 filling stations in Nigeria.

“This collaboration with IPMAN presents the most economic and expedient platform to deploy the necessary infrastructure to support a fast national roll-out of CNG (Compressed Natural Gas) for vehicles.”

IPMAN expressed belief that this platform would provide a cushion to Nigerians from the shock of high petrol price once subsidy is removed and would significantly reduce the need for foreign exchange to import petrol.

“Furthermore, CNG emits 30 to 60 per cent less Green House Gases than petrol and diesel, making it more appealing to attracting additional financing from international and regional developmental finance institutions that are disposed to supporting natural gas utilisation projects compared to petrol refineries.

In addition, the Nigeria Midstream Downstream Petroleum Regulatory Authority and the Gas Aggregation Company of Nigeria have set up a joint working committee to provide the permits, approvals, and natural gas feedstock as required

What is left is the support of the Central Bank of Nigeria to provide access to the Gas Expansion Fund for vehicles, Keke, and truck owners to access loans to finance the acquisition of natural gas conversion kits,” the oil marketers stated.

IPMAN said it had applied to CBN through the NIRSAL microfinance bank for a partnership to develop a finance scheme for qualified Nigerians to access the gas expansion facility to convert their vehicles and need the support of the federal ministry to conclude with CBN NIRSAL Microfinance Bank.

It said the Gas Expansion Fund was envisaged to support the increased utilisation of natural gas in Nigeria, and access to the funds by qualified vehicle owners would support and justify IPMAN members making the required investment along the natural gas value chain to deliver gas to vehicles.

“Without a large pool of CNG customers, IPMAN will not be able to raise the funds required to setup CNG filling stations.

“We believe that with the support of the Ministry of Finance, IPMAN’s partnership with Gas Analytics will provide a platform that can in a matter of a few months cushion the impact of petrol subsidy removal and significantly reduce the need for foreign exchange to import petrol.

“We request an audience with you to discuss this further and present our proposal. We looking forward to hearing from you soon. Thank you for your time and consideration,” the oil dealers stated through their umbrella association.

In August 2021, the Federal Government claimed to have commenced the implementation of the CBN N250bn intervention fund for the National Gas Expansion Programme.

The then Permanent Secretary, Federal Ministry of Petroleum Resources, Bitrus Nabasu, had stated that the process of receiving applications from potential beneficiaries to access the facility had commenced.

The intervention facility for the NGEP is targeted at stimulating finance to the critical sector and to motivate investment in the gas value chain, and is being funded by the CBN

Nabasu had stated that the fund was available to finance the establishment of gas processing plants and small-scale petrochemical plants, gas cylinder manufacturing plants, CNG regasification modular systems, automatic conversion kits or components manufacturing plants, CNG primary and secondary compression stations, as well as micro distribution outlets and service centres of liquefied petroleum gas sales.

Labour, FG to meet

Meanwhile, the Nigerian Labour Congress said it would be engaging the incoming administration after its inauguration to discuss the way forward with respect to the fuel subsidy regime.

The Vice President, NLC, Adewale Adeyanju, in a telephone conversation with the PUNCH in Lagos on Monday, said that the union was yet to come out with any position as regards the subsidy removal.

He added that the union was waiting for the Bola Tinubu-led administration to be sworn in before engaging the government

The labour union under the NLC has not come out with its position on the removal of subsidy. It is always a market for the big guy so the NLC has not come out. And the incoming administration too, they have not met with us, they have not discussed anything with us. We are still waiting for them to come in.

“They have not discussed anything with us that has to do with the removal of fuel subsidy. So there is no how I am going to comment on that, rather than we wait till when the new government is sworn in then we need to sit down with them and come out with ideas that will be good for Nigerians,” Adeyanju stated.

He dismissed the allegation that the All Progressive Congress was accusing the union of opposing the removal of subsidy.

“I do not think APC is accusing NLC of opposing the removal, we have not met. They are only using that for their own interest because to me I don’t think the congress has made any statement either to remove it or not.

“There is no statement from the union; it is always from the politicians for them to have their way. So there is no how APC is going to accuse NLC in this matter because they won the election and they are going to meet with the NLC. So how will they be accusing NLC of not supporting the removal? We have not come out with any statement regarding the removal of the fuel subsidy,” the NLC official stated.

He, however, noted that the NLC was saying that “the continuation of subsidy is likely going to collapse the economy. You are in this country and we know what all of us are passing through. If you have a replacement, it is better for all of us. Than to continue deceiving ourselves that we are removing it today and not removing it tomorrow.

 “They should stop deceiving us, let us know if we want to die, we will die at once rather than someone deceiving us that it is not going to be reduced and it will be reduced. If they remove it, it is still for the good of all Nigerians and if they don’t remove it, it will be at the other side too, but I know that we are going to pay more.”

NARTO demands subsidy removal

Also speaking on the issue, the National Association of Road Transport Owners called for the immediate halt in the payment of subsidy on petrol.

“For us, we support the full deregulation of the downstream oil sector and we will appreciate it if the government can do it immediately.

“This is because if there is full deregulation, our freight rates will be paid instantly, as against the current situation where we wait until we are reimbursed by the government,” NARTO President, Yusul Othman, stated.

Providing further explanation on how subsidy removal would ensure the immediate payment of freight rates, Othman said, “Right now we work on credit. You load your truck, you make all necessary payments yourself, you go and discharge, after discharging, you submit your bill before it will be eventually paid.

“And the payment will be made after going through two to three months of government bureaucracy. But when there is full deregulation, it is cash and carry, transporters will be paid immediately under a different and better arrangement, against working with the government.”

On the fear that fuel subsidy removal would cause hardship in Nigeria, Othman stated that the situation would improve as things progress

Yes there may be immediate hardship, but in the long run it will turn out to be good. For when you look at it now, how many people in Nigeria own private vehicles? The number is very few when compared to the majority who do not have vehicles.

“So we are subsidising very few persons at the detriment of the majority who do not have their own vehicles. Of course, we will expect that by the time fuel price goes up, the cost of many things will increase, as is being argued by civil servants.

 “But the truth again is that how many civil servants do we have when compared to the generality of the public? They are just very few. But the government can use the money to provide better alternative services,” Othman stated