No More Fuel Subsidy, FG Tells IMF
SWITZERLAND, MAY 03
In a request for $3.4bn COVID -19 financial assistance, the federal government has assured the International Monetary Fund (IMF) that the era of fuel subsidy is over.
This pledge was made by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, and the Central Bank of Nigeria Governor, Mr. Godwin Emefiele and addressed to Managing Director of the International Monetary Fund, Mrs. Kristalina Georgieva.
“The recent introduction and implementation of an automatic fuel price formula will ensure fuel subsidies, which we have eliminated, do not reemerge,” the Federal Government told the IMF in the letter.
The federal executive council also agreed to the deregulation of the downstream oil sector and automatic adjustment of retail prices to trends prevalent in the global oil market.
Last Tuesday, the IMF approved the country’s request while publishing the Federal letter of intent in a detailed report on Wednesday
Mr Tunji Oyebanji, Chairman, Major Oil Marketers Association of Nigeria expressed the concerns of market operators with this new development
According to him “Prices (supply or purchase costs and open market sales prices including pump prices) should not be regulated but monitored against anti-competitive and antitrust abuses by the already established competition commission and subject to its clearly stated rules and regulations
“All suppliers, transporters, service providers and market players (including the Nigerian National Petroleum Corporation) should be subject to the same rules and regulations, backed by appropriate legislation.”
He also said that all market players should have equal access to foreign exchange at competitive rates
“Abuses related to market dominance include cutting prices in order to drive out competitors, determining market share of other market players using their dominance in the supply chain and sometimes selling at a loss (or break-even) to manipulate the market.
“Monopolies create inefficiencies and inequities in the market, government interference and abuse.”
Crude oil fluctuations among other issues pervading the sector have discouraged private oil marketers from importing the commodity, making NNPC the sole importer of crude oil for over two years.