Although the federal government had sounded the alarm of an end to the fuel subsidy era, stakeholders are of the opinion that there could be a re-emergence, especially as oil price currently surges at the international market. As the economic reality of the COVID-19 started to bite harder on government revenue, the federal government had in March 2020 said it could no longer continue to subsidise fuel.

This heralded a new era- the downstream deregulation where the masses would have to pay whatever the cost of the products, especially since Nigeria does not refine but imports its petroleum products- all charges would have to apply. However, since the federal government had washed it hands off subsidy, the Pipeline and Products Marketing Company, PPMC kept increasing the prices it sold to marketers. On the other hand, oil marketers also lamented increasing ex-depot prices, with the state petroleum company, NNPC worsening their woes and reducing profits by fixing price ranges- a move marketers argued was against a fully deregulated downstream sector as touted by the government.

Then came the face-off between the marketers and the federal government, where the marketers said they could no longer bear the brunt of subsidy and would have to transfer the burden to Nigerians.Oil prices had hit $71 per barrel on Monday, more than doubling the $30 benchmark set by the federal government in the 2021 national budget.The rise above $70 per barrel marks the first time since the COVID-19 pandemic. The U.S. crude also reached its highest in more than two years following reports of attacks on Saudi Arabian oil facilities. Yemen’s Houthi forces had fired drones and missiles at Saudi Arabia’s oil industry on Sunday, including a Saudi Aramco facility at Ras Tanura vital to country’s petroleum exports.

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Source: SweetCrudeReports