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

Accord Party presidential aspirant Gbenga Olawepo-Hashim says petrol in Nigeria could sell for about 605 naira per litre, arguing that the current price reflects the government’s domestic crude-pricing system rather than an unavoidable market cost.

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The truth of it is that the price is currently inflated. By who? By the government.

Speaking on Channels Television’s “Politics Today,” Olawepo-Hashim said data from the Nigerian National Petroleum Company put crude production costs at about $30 per barrel. Adding a $15 margin, about $5 for refining and $7 for transport and insurance would bring the total to roughly $57 per barrel, he said.

Using an exchange rate of 1,400 naira to the dollar, he estimated that the calculation could support a petrol price of about 501 naira per litre. He proposed 605 naira as a possible pump price after adding an energy tax of about 100 naira to support alternative energy development.

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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.

Olawepo-Hashim disputed the term “fuel subsidy,” saying the issue was mainly an accounting and domestic-pricing matter. He argued that crude supplied to Nigerian refineries should not automatically carry the same price as crude sold internationally, because the international price reflects opportunity cost rather than the cost of domestic consumption.

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You cannot price your local products at international price.

He cited Saudi Arabia and Kuwait as examples of oil-producing countries that, in his view, do not apply international crude prices to domestic markets in the same way. He also called for the figures behind Nigeria’s pricing system to be made public and alleged that the system could involve over-invoicing.

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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.