Special FX Rate for NNPCL Will Crash Petrol Prices (TUC)
The Trade Union Congress (TUC) has urged the Central Bank of Nigeria (CBN) and the Nigeria Customs Service (NCS) to provide Nigerian National Petroleum Company Limited (NNPCL) a preferential foreign exchange rate.
According to the TUC, granting the NNPCL a special FX rate of roughly ₦1000/$ instead of the official rate of ₦1,600/$ will reduce the cost of petrol imports by the state-run firm and reduce fuel costs to around ₦600 from the present pump price of over ₦900, depending on the region of the country.
Osifo, who is also the President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), stated that the true issue is the current administration’s devaluation of the currency, rather than President Bola Tinubu’s elimination of subsidies in May 2023.
“The ultimate elephant in the room is devaluation,” Osifo noted, revealing that petrol would be selling at approximately ₦350 if the naira was not devalued simultaneously with the elimination of petrol subsidies last year, decreasing from roughly ₦700/$1 to more than ₦1,600/$1.
Despite a recent increase in petrol pump prices from roughly ₦600 to over ₦900, the TUC boss stated that the NNPCL continues to provide subsidies.
Osifo stated, “If you grant a preferential rate to NNPC, you won’t have to pay for subsidies anymore. Dangote (the refinery) obtained the same preferential rate of sale.
“Before now, our customs offered unique charges. As a result, the special rate should be applied to that specific sector.
If you elect to sell crude to Dangote in naira, the exchange rate will be around 1,000 naira per dollar. If you accomplish this, all marketers will be able to sell to Dangote at a lower price than is currently possible.
“It is about the exchange rate, and that is what we have propounded over time.”
The TUC boss warned that if the government does not take immediate action, the effects of the new petrol price hike will reverberate across Nigeria, resulting in job losses and company closures, as predicted by industry groups such as the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), the Lagos Chamber of Commerce and Industry (LCCI), and the Nigerian Employers Consultative Association (NECA).
He stated that if the government fails to reduce petrol prices to roughly ₦600, the TUC organs will convene to determine next steps.