PENGASSAN’s claim that the floating of the naira is behind the persistent petrol price hike in Nigeria, rather than the removal of subsidy.
Festus Osifo, the President of PENGASSAN, believes that Nigeria’s major challenge is the Federal Government’s devaluation of the Naira.
Osifo’s statement highlights the significant impact of Nigeria’s exchange rate devaluation on various sectors, particularly fuel pricing. He emphasizes that if the naira was pegged at N450 to a USD, petrol prices could have been less than N400, even without subsidy removal . This assertion is supported by the fact that in May last year, the official exchange rate was indeed N450.
To put this into perspective, let’s consider an example. If Total Energies made a profit of USD200 million, multiplying it by N450 would give us the naira equivalent. However, with the current exchange rate, that same USD200 million would be multiplied by N1600, resulting in a substantial increase in naira revenue for the government. This is why agencies like the Federal Inland Revenue Service (FIRS) and the Nigeria Customs Service are declaring higher revenues .
It’s essential to recognize that the recent fluctuations in exchange rates and devaluation of the naira have contributed significantly to Nigeria’s economic challenges.
That’s an interesting point! Freezing the exchange rate at N700 for oil sector distributors could have potentially cushioned the impact of fuel price hikes. A stable exchange rate would reduce the pressure on fuel importation costs, thereby slowing down price increases.
