Fuel can sell for N605/litre, subsidy is ‘Accounting Magic’ — Olawepo-Hashim

Accord Party presidential aspirant, Gbenga Olawepo-Hashim, has challenged the Federal Government’s justification for the high price of petrol, saying the fuel subsidy debate is essentially “accounting magic” and that petrol could sell for about N605 per litre.

Olawepo-Hashim made the assertion on Channels Television’s Politics Today, arguing that the cost of petrol in Nigeria has been inflated by the way the government prices crude oil supplied to the domestic market.

He said Nigerians had been made to believe that cheaper petrol was no longer possible, insisting that a review of the domestic crude pricing structure could significantly reduce the pump price.

“The truth of it is that the price is currently inflated. By who? By the government,” he said.

Olawepo-Hashim said data from the Nigerian National Petroleum Company Limited (NNPCL) put the cost of producing a barrel of crude in Nigeria at about $30.

He said that with a $15 margin added to the production cost, alongside about $5 for refining and $7 for transportation and insurance, the total would amount to roughly $57 per barrel.

Based on his calculation, he said the figure could translate to a petrol price of about 34 cents per litre, which he estimated at approximately N501 per litre at an exchange rate of N1,400 to the dollar.

He proposed N605 per litre as a possible pump price, saying the figure would include an additional energy tax of about N100 to fund the development of alternative energy sources.

The Accord chieftain also disputed the description of the previous arrangement as a fuel subsidy, arguing that the issue was largely a consequence of the government’s accounting and domestic crude pricing system.

“What you have had really has never been any subsidy, even when we had lower pump petrol prices. The subsidy issue is more of an accounting magic,” he said.

He argued that crude supplied to Nigerian refineries should not necessarily be priced at the same rate as crude sold on the international market.

According to him, the international price represents the opportunity cost of crude and should not automatically become the price charged for crude consumed domestically.

“You cannot price your local products at international price,” he said.

Olawepo-Hashim cited Saudi Arabia and Kuwait as examples of oil-producing countries that, according to him, do not apply international crude prices to their domestic markets in the same manner as Nigeria.

He also called for greater transparency over Nigeria’s crude production costs, questioning why domestic crude was being priced at its current level.

The presidential aspirant alleged that there could be “a lot of over-invoicing” in the system and challenged stakeholders to make the underlying figures public.

“If anyone has a different idea, they should bring their books. Let’s see what it is, how much it costs to produce a barrel of crude in Nigeria,” he said.