The Trade Union Congress of Nigeria (TUC) has urged the Federal Government to introduce a special foreign exchange scheme for Dangote Refinery at a rate lower than the official market rate, aiming to reduce fuel prices for Nigerians.
About three weeks after the government increased fuel prices, a further hike was announced on Wednesday, despite the growing hardships faced by the population due to previous price increases.
Speaking at a press briefing in Abuja on Thursday, TUC President Comrade Festus Osifo lamented that the removal of fuel subsidies marked the beginning of Nigeria’s current economic challenges. He argued that no government globally neglects critical sectors of its economy, emphasizing the need for state intervention in the energy sector.
Osifo outlined three key principles of energy security: availability, accessibility, and affordability. He explained that offering foreign exchange to the Dangote Refinery, effectively subsidizing production, would not only lead to lower fuel prices but also create employment and improve operational efficiency in the oil and gas sector.
He stated: “If energy is not available, even at a reduced price, the market will suffer from distortions, leading to speculation. Availability is crucial. The current scarcity and long queues, even after price hikes, stem from a lack of supply.”
“Affordability is vital because Premium Motor Spirit (PMS) is a commodity used by every Nigerian, especially given our electricity issues. All classes of Nigerians—rich, middle class, and poor—depend on this product for survival.”
“The main affordability challenge is the exchange rate. If the sector were fully deregulated and the exchange rate rose to ₦1,200 per dollar, PMS would sell for below ₦700 per litre, especially with the Dangote Refinery in operation.”
“Experts worldwide agree that the naira is undervalued. We’ve been warning since April about the potential dangers, urging the government to strengthen the currency. This issue affects more than just PMS; most of what we consume in Nigeria, including food and fertilizer, is imported.”
“We are still advocating for government intervention in the sector by providing foreign exchange to the Dangote Refinery at ₦1,200 per dollar. This would drive PMS prices below ₦700 per litre. Our demand is for the government to establish a special forex scheme specifically for this purpose.”
“There is no government in the world that does not intervene in critical sectors. In this case, the energy sector is crucial. We cannot leave it to the volatility of the naira. If the government makes this special intervention, PMS prices will drop below their previous levels.”
Addressing the question of forex intervention when the government sells crude to Dangote in naira, Osifo explained, “Crude is traded globally, so you must convert its price from dollars to naira. The issue is which exchange rate you use.”
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“If the government intervenes, it’s not subsidizing consumption but subsidizing production, which would enable the Dangote Refinery to employ more Nigerians and operate more efficiently. This would bring PMS prices down to where they were in June of last year.”
Osifo also revealed that Dangote Refinery currently produces an average of 8 million litres of fuel per day, which he described as inadequate for Nigeria’s daily consumption of at least 35 million litres.
To address this shortfall, the TUC president urged the Federal Government to issue licenses to marketers, allowing them to source petroleum products from the Dangote Refinery rather than depending solely on the Nigerian National Petroleum Company Limited (NNPCL) as the sole distributor.
“As things stand, we want the government, through the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), to grant licenses to all marketers so they can source products from the Dangote Refinery. If Dangote can provide the 35 million litres we need daily, all marketers should have access to it and distribute it across the country.”
“We also need clarity on Dangote Refinery’s current production capacity. While its capacity is said to be 650,000 barrels per day, which translates to about 50 million litres of fuel, what is its actual output today? Can it meet the nationwide demand? Producing fuel is one thing, but evacuating it is another.”
“Even if Dangote Refinery reaches 35 million litres per day, do we have the capacity to evacuate that amount daily? We call on regulators to provide clarity.”
“If the country cannot meet demand with domestic production, we urge the government to speed up approvals and provide necessary support to help the Dangote Refinery ramp up production to exceed 40 million litres per day.”
“If Dangote Refinery’s current output is only 15 million litres, while efforts to boost production continue, we are demanding that the government source the shortfall from other suppliers until Dangote’s output is sufficient to meet national demand.”
