Robert Dickerman, the CEO and Managing Director of Pinnacle Oil and Gas Limited, has made a startling revelation about the Nigerian Government’s spending on petrol subsidies. Despite President Bola Tinubu’s announcement of total deregulation of petroleum products, Nigeria is still shelling out a whopping one trillion naira every month for petrol subsidies.
Speaking at a panel discussion during the Nigeria International Energy Summit in Abuja, Dickerman highlighted the significant subsidy that is still in place. This subsidy has kept the price of gasoline in Nigeria artificially low, leading to potential smuggling activities to neighboring countries.
According to Dickerman, foreign investors and lenders, as well as government-run DFIs, have been clear about their expectations for Nigeria. They are looking for a conservative fiscal policy, a crackdown on corruption, competitive markets, and fair enforcement of contracts. However, the ongoing petrol subsidy is a major roadblock to achieving these goals.
The consequences of this subsidy are far-reaching. Not only is Nigeria subsidizing neighboring countries through smuggling, but the country’s economy is also suffering. Critical programs are being deprived of funding due to the massive monthly expenditure on petrol subsidies, which amounts to approximately one trillion naira.
Furthermore, Dickerman pointed out that if the subsidy were to be removed, Nigeria would face a shortage of petrol supply unless domestic refineries start producing gasoline. Currently, all petrol supplies are imported from the international market, where prices are dictated by market forces.
In conclusion, Dickerman’s revelations shed light on the hidden costs of petrol subsidies in Nigeria. The country’s economy is being burdened by this massive expenditure, which is not only unsustainable but also detrimental to Nigeria’s long-term economic growth. It is high time for the government to reevaluate its subsidy policies and work towards a more sustainable and competitive energy market.
