TUC Urges Special FX Rate For NNPCL To Cut Petrol Prices

TUC Calls for Special FX Rate to Reduce Petrol Prices

The Trade Union Congress (TUC) has urged the Central Bank of Nigeria (CBN) and the Nigeria Customs Service (NCS) to implement a special foreign exchange rate (Fx rate) for the Nigerian National Petroleum Company Limited (NNPCL).

This call aims to address the high cost of petrol in the country.

Special FX Rate Proposal

According to the TUC, granting NNPCL a special forex rate of approximately ₦1000/$1, as opposed to the current official rate of ₦1,600/$1, could significantly reduce the cost of petrol importation.

Festus Osifo, TUC President, argued that this measure would help bring down petrol prices to around ₦600 per litre, from the current price of over ₦900, depending on the region.

In an interview on Channels Television’s Politics Today on Monday, Osifo emphasized that the main issue is not the subsidy removal by President Bola Tinubu in May 2023, but rather the devaluation of the naira by the current administration.

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Impact of Naira Devaluation

Osifo explained, “The ultimate elephant in the room is devaluation.” He noted that if the naira had not been devalued alongside the subsidy removal, petrol prices could have been around ₦350 per litre.

The naira’s value has dropped from around ₦700/$1 to over ₦1,600/$1, contributing to the increase in petrol prices.

Despite the recent adjustment of petrol pump prices from around ₦600 to over ₦900, the TUC President pointed out that the NNPCL continues to bear the cost of subsidy.

He suggested that a special forex rate for NNPC would eliminate the need for subsidy payments.

Comparisons with Other Sectors

Osifo compared the situation to the special rates given to other sectors. “The same special rate that was given to Dangote (Refinery) should be applied to NNPC,” he said.

He highlighted that similar special rates have been used in the past by Customs.

He continued, “If you set the exchange rate for crude oil sold to Dangote at ₦1,000 to a dollar, it would allow marketers to buy at a reduced rate compared to current practices.”

Potential Consequences of Inaction

Osifo warned that failure to implement this change could lead to severe consequences. “If the government does not act immediately, the fresh hike in petrol prices will have widespread effects, including job losses and business closures,” he said.

Industry groups like the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), the Lagos Chamber of Commerce and Industry (LCCI), and the Nigerian Employers Consultative Association (NECA) have also expressed concerns about the economic impact.

Next Steps for TUC

Osifo stated that the TUC would hold meetings to determine their next steps if the government does not revert petrol prices to approximately ₦600.

The organisation is determined to ensure that the issues surrounding petrol pricing and forex rates are addressed promptly to prevent further economic strain on the country.