By Eberechi Obinagwam
Comrade Festus Osifo, the president of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has said that naira devaluation is the primary reason for the price increase in Premium Motor Spirit (PMS), making it unaffordable for Nigerians.
Osifo stated this on Tuesday during the presentation of the communiqué from the third edition of PENGASSAN Energy and Labour Summit, PEALS, 2024 in Lagos state.
Citing an example, he said: “If our exchange rate was N450 to a dollar, Premium Motor Spirit (PMS) would be selling for around N320 or N350 per litre. So, the main issue wasn’t the removal of subsidy; it was devaluation.
“We are still pushing that the government cannot float its currency 100 per cent. No government in the world does that. Maybe the United States, because they are standard references. But in every other country, go and check the history of China, Japan and Russia, they manage their currency one way or another. It is also difficult in totality to float a currency where you don’t control the supply, per se,” he stated.
Devaluation makes a domestic currency less expensive than other currencies. It’s implications is that it makes the country’s exports relatively less expensive for foreigners and also makes foreign products relatively more expensive for domestic consumers, thus discouraging imports.
Naira devaluation is a decrease in the value of the Nigerian Naira (NGN) compared to other currencies, especially major currencies like the US Dollar (USD).
Osifo also added that stability in exchange rate will help in achieving energy security, “To achieve Energy Security, Energy must be affordable. To ensure affordability, the Government must do all it can to stabilize the exchange rate as the continuous slide of the Naira will greatly hamper the affordability of energy in Nigeria,” he said.
Reeling out the outcome of the summit from the communiqué, he said the Federal Government should increase its shareholding stake in Dangote’s Refinery from the current 7% to at least 45% to ensure energy assurance and security to the citizens and also own at most 49% of shareholding in the four refineries once operational, “Ramping up efforts to make the Nation’s four refineries work; once operational, the Government should divest majority shareholdings and own at most 49% of the shareholding in the four refineries. Core investors will be brought in to take the 51% as applicable in NLNG.”
He called on government to partner with players in the private sector to maintain the already available petroleum product storage in the six geopolitical zones in the country, saying that when operational, petroleum products will be stored there and only made available when there is a shortage in supply.
“This will help in eliminating the bad roads and severe erosion-imposed perennial shortages that often lead to queues at petrol stations across the country,” he said.
He recommended expansion of pipelines that could be used in the delivery of refined petroleum products across the length and breadth of the country as this, he said, will reduce the pressure put on our roads by trucks carrying these products.
On CNG, he said government should make provisions of Compressed Natural Gas (CNG) infrastructures across every city in Nigeria through its partners as it has been adjudged to be the most affordable and cleaner form of energy that is required to propel a car in the country today.
“Provision of CNG infrastructures across the country. Compressed Natural Gas (CNG) has been adjudged to be the most affordable and cleaner form of energy that is required to propel a car in the country today. Sadly. The infrastructure for this product is sparsely distributed across the country. The government through its partners should deepen the reach of these infrastructures across every city in Nigeria.”
To enhance Nigeria’s Energy mix, he said government should give more incentives to attract the International Oil and Gas Companies and the Indigenous Oil and Gas Producers to invest in more crude oil production in the next five years, “50% of the accruable revenue should be dedicated to investing in renewable energy like solar, batteries, wind, hydrogen, hydro, etc. he said,”
Osifo also recommended application of Artificial Intelligence in the Oil and Gas Industry to track and monitor trucks used in supplying petroleum products to retail outlets to curb cross border smuggling that has threatened Nigeria’s energy security.