Subsidy Removal: DPR Says Petrol Price May Hit N1,000 Per Litre Without Alternative Energy


THE Department of Petroleum Resources (DPR) has warned that the pump price of petrol in Nigeria may rise as high as N1,000 per litre if the current subsidy on the product is totally removed without an alternative energy source, a statement posted on DPR website on Monday  reveals.

The statement, entitled “DPR: Without Alternative Energy, Petrol Price Will Rise On Subsidy Removal”, quoted the Director of DPR, Sarki Auwalu, to have stated, while answering questions after delivering a paper entitled; “A Discussion on the Future of the Nigerian Petroleum Industry,” he delivered in Lagos, that Nigerians may pay as high as N1, 000 to buy one litre of petrol in the country when subsidy on petrol is removed and when the alternative energy or autogas gas policy becomes fully operational.

Auwalu said ending petrol subsidy would require making alternative fuel available to Nigerians and that failure to do that will plunge Nigerians into paying higher petrol prices when subsidy is removed with Nigerians probably going to pay as high as N1,000 to buy one litre of petrol in the country. This will require alternative energy or autogas gas policy to become fully operational.

He, however, said the alternative fuel regime comes with initial cost as it will lead to spending $400 to convert one vehicle from running on petrol or diesel to running on either Liquefied Natural Gas (LNG) or Compressed Natural Gas (CNG).

Auwalu reiterated that converting 8 million public vehicles currently present in Nigeria to gas-powered engines will cumulatively cost $3.2 billion to achieve.

“So, to eliminate subsidy, they don’t call it subsidy anymore now, it’s under-recovery of purchase. So, to eliminate under-recovery, what you need is alternative fuel. Without alternative, you will subject people to higher prices and that is why we go for price freedom.

“As at today, there are 22 million cars in Nigeria; eight million are for public use. Imagine if you want to convert every car into gas, the average cost of conversion is $400. Converting eight million cars requires $3.2 billion. To do that, there are a lot of environmental investors which can invest and recover from the sale of gas and we are encouraging that.

“Once that is achieved, you will see that PMS can be sold at N1000. After all, the average distance covered by one gallon equivalent when you compare it with LNG or CNG with respect to energy for mobility is 2.7 against one. One for PMS, 2.7 for LNG or CNG.

“So, with that advantage, you will see that it creates an opportunity for this industry again. The issue of subsidy, the volume will all vanish and that is what we are working towards.”

He, however, warned that the rise in Nigeria’s local refining capacity as seen in the coming on stream of a number of refineries in the country without a corresponding increase in the country’s oil production volume may threaten the country’s membership of the Organisation of Petroleum Exporting Countries (OPEC).


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