The National Institute for Policy and Strategic Studies (NIPSS) has assured Nigerians that with the commencement of operations at Dangote Refinery and other local refineries, the price of Premium Motor Spirit (PMS), commonly known as petrol, is expected to drop significantly in the near future.
Speaking on Channels Television’s The Morning Brief on Tuesday, NIPSS Director-General, Ayo Omotayo acknowledged that while the removal of the fuel subsidy by President Bola Tinubu’s administration initially resulted in a sharp rise in petrol prices, Nigerians should expect a decrease in the cost of fuel as more refineries come onstream.
Before removing the subsidy, petrol was sold at less than ₦200 per litre. However, following the government’s decision, the price soared to around ₦930 per litre, depending on the region.
Omotayo stated that although initially difficult, removing the subsidy was necessary for the economy’s long-term stability.
He explained, “With the removal of the first subsidy, we have Dangote Refinery coming on. We have the other refineries. The refinery in Port Harcourt has worked continuously for 110 days, if I’ve counted right! These are the short-term gains.”
Omotayo assured Nigerians that while fuel prices have increased for now, the situation is expected to improve.
He predicted, “We are buying fuel a little bit more expensive, but as we predict at the National Institute that if we continue with what we are currently doing, fuel by itself will come down. We’re looking at it coming down as low as ₦750 before the end of the year. And of course, foreign exchange, we believe, will still drop to about 1.3 before the end of the year, and it is going to continue like that as more of our refineries come into place. We will become a net exporter in the long run.
“The gains at this time are very little, but then in the long run, we will make up for whatever sacrifices we have made today as Nigerians.”
Omotayo further defended President Tinubu’s decision to remove the subsidy, describing it as a timely and necessary step to prevent Nigeria from financial collapse.
He explained that the government was spending unsustainable amounts subsidizing fuel not only for domestic use but also for neighboring countries, which exacerbated the nation’s fiscal challenges.
“For us at the National Institute, it was a very timely step that Mr. President took, and it has come a long way in saving Nigeria,” Omotayo stated.
He continued, “We were on the verge of collapse with subsidies. The subsidies we were paying were just totally unimaginable, and of course, we were subsidizing fuel as far as Burkina Faso, as far as Sierra Leone in some instances. So a government that wants to succeed must take very tough decisions.”
Omotayo commended President Tinubu for the bold decision to end the subsidy, despite its unpopularity in some quarters. He acknowledged that while the removal may have felt harsh to the Nigerian populace, it was a necessary measure to safeguard the nation’s future.
“For us at the National Institute, we commend the President for the removal of fuel subsidy, even though the Nigerian politics may feel it is harsh, that we needed some more time,” he said.
