The Department of Petroleum Resources says the pump price of petrol in Nigeria may rise up to as much as N1000 per litre when the petrol subsidy regime comes to an end without an alternative energy source.
DPR Director, Sarki Auwalu, stated this while responding to questions and comments generated by a paper he delivered in Lagos, recently, at the Second Quarter, 2021 Business Dinner of Petroleum Club Lagos.
Responding to the subsidy concerns and the disparity in the petrol consumption figures given by the Nigerian National Petroleum Corporation and the DPR, Auwalu acknowledged that Nigeria was spending so much on petrol subsidy.
He said eliminating it would require making alternative fuel available to Nigerians and that failure to do that could plunge Nigerians into paying higher petrol prices when subsidy is removed.
According to a statement on the DPR website on Monday, Auwalu stated 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.
He, however, said the alternative fuel regime comes with initial cost as it will lead to spending $400 to convert one vehicles from running on petrol or diesel to running on either Liquefied Natural Gas or Compressed Natural Gas.
He said, “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 an 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.”