Subsidy: Makinde Questions Nigeria’s Petroleum Pricing Framework

Oyo State Governor, Seyi Makinde, has questioned the petroleum products pricing framework in Nigeria, saying the debate over fuel subsidy should shift towards determining the right pricing model for an oil-producing country.

Makinde stated this in his newsletter issued on Thursday, September 3, while outlining his vision for what he described as a “Reset Nigeria” movement.

He argued that the debate over petroleum pricing had been overly focused on whether the subsidy regime should be restored or permanently removed, rather than examining whether the current pricing system was appropriate for Nigeria.

“The petroleum products pricing question should not simply be whether subsidy should return or remain removed. I believe that the more important question is: what is the right pricing framework for an oil-producing country like Nigeria?” he said.

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Makinde said Nigerians should be able to understand the factors used to determine the price they pay for petroleum products, including crude oil benchmarks, refining costs and margins, exchange-rate assumptions, logistics and distribution costs, taxes and levies.

According to him, the components of the pricing framework should be made publicly accessible and sufficiently clear for Nigerians to scrutinise.

“What Nigerians deserve to know is the current pricing framework and the assumptions that determine what we pay at the pump,” he said.

The governor also rejected the argument that Nigerians should bear higher petroleum costs to eliminate the price difference that makes smuggling into neighbouring countries profitable.

“We should also reject the argument that Nigerians must pay more for petroleum products simply to eliminate the price difference that makes smuggling into neighbouring countries profitable,” Makinde said.

“Nigerians should not be made to bear the cost of government’s inability to secure its borders.”

He said the country’s petroleum pricing debate should form part of a broader effort to examine whether Nigerians are receiving fair value from the natural resources they own.

Makinde said his proposed approach would involve questioning the existing system rather than limiting the debate to the return or removal of subsidies.

“Reset Nigeria means being willing to interrogate the system itself,” he said.

The governor disclosed that his administration would, in the coming weeks, present its alternative position on petroleum pricing and allow Nigerians to assess the proposal.

“In the coming weeks, we will put forward our alternative and allow Nigerians to judge it for themselves,” he said.