The CEO of Rainoil Limited, Gabriel Ogbechie, has expressed concerns about the impact of petrol subsidy payments on Nigeria’s financial position. He stated that the subsidy payment is undermining the country’s financial position, as the federal government now spends N600 billion on petrol subsidies monthly.
Ogbechie made this statement during the Stanbic IBTC Energy and Infrastructure Breakfast Session held in Lagos, where he highlighted the financial implications of the subsidy payment.
The Nigerian National Petroleum Company (NNPC) Limited had previously denied the return of petrol subsidy, stating that it has been removed entirely. However, Nasir el-Rufai, the former governor of Kaduna state, recently confirmed that the federal government is spending more on petrol subsidy than before.
Ogbechie explained that the subsidy payment was initially removed, leading to an increase in the price of petrol from N200 to N500 per litre. However, the subsidy was reintroduced following the devaluation of the naira in the foreign exchange (FX) market. With the current daily consumption at 40 million litres and the FX rate at N1,300, the government’s subsidy per litre on petrol falls between N400 and N500.
The NNPC’s monopoly on petrol imports further supports the existence of subsidies. Ogbechie urged the government to prioritize modular refining to improve self-sufficiency in petroleum products.
The real estate sector is also experiencing the impact of subsidy removal and currency devaluation, with operators facing increased running costs, delayed project delivery, and rising housing prices. The harsh economic consequences of petrol subsidy removal and naira devaluation have led to increased costs for cement, building materials, and other components, making it difficult for developers to deliver affordable housing.
