The Nigeria Governors Forum (NGF) has recommended the outright removal of subsidy on Premium Motor Spirit (PMS), popularly known as fuel or petrol, in the country.
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At the virtual meeting of members of the forum on Wednesday, a committee set up by the NGF on subsidy and petrol price recommended that the commodity be sold between N380 per litre and N408.5 per litre.
Nasir El-Rufai, Chairman of the NGF committee on subsidy on petrol, who is also the Governor of Kaduna State, stated that the current subsidy regime cannot be maintained because smugglers and illegal markets in neighbouring African countries were the beneficiaries.
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According to him, Nigeria, like other Organisation of the Petroleum Exporting Countries member countries, agreed to cut production to keep the prices high but that Nigeria could not fully benefit from the regime because of subsidies.
He said: “Between N70 billion and N210 billion is estimated to be spent every month to keep gasoline price at N162 per litre, this is below the cost price and the remittance to the federation account will shrink to less than N50 billion per month or even zero if threats persist.
“We are already at zero. I understand for tomorrow, so this scenario has occurred.
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“Why are we keeping the price at N162? We are keeping the price because the Federal Government and trade unions met and agreed to the suspension of some industrial action months back.
“Even though we all supported deregulation of petroleum products prices last year, this agreement was suspended by the Federal Government because of a threat of industrial action by unions. This is the root of the problem and now we are back to losing between N70bn to N210bn per month.”
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Governor El-Rufai disclosed that only about 12 states consumed two-thirds of the petrol, which was heavily subsidised.
He explained that the committee recommended N408.5 litre as the appropriate price in the circumstance but noted that N380 per litre could be the minimum following conciliatory talks with labour unions.
“The committee recommends PMS pump price increment from the current N162per litre to N408.5 per litre (negotiations with organized labour unions). N380per litre (settlement with organized labour).” the governor said.