The Department of Petroleum Resources says the petrol price in Nigeria may spike up as much as 1000 Naira per litre at the close of the petrol subsidy regime if another source of energy is not found to replace it.
The DPR Director, Sarki Auwalu, said this while answering questions and comments which came up as a result of the paper he presented in Lagos, at the Second Quarter, 2021 Business Dinner of Petroleum Club Lagos.
Auwalu said that Nigeria was spending so much on petrol subsidy when responding to the matters on subsidy and the disparity in the petrol usage figures given by the Nigerian National Petroleum Corporation.
He claimed the removal of fuel subsidy would demand the provision of alternative power sources for the country and if not so, Nigerians will have to pay a higher amount, reaching 1000 naira per liter for petrol to survive.
He stated his price estimation in a statement on Monday which he titled, “Without Alternative Energy, Petrol Price Will Rise On Subsidy Removal”.
However, He did say, that the replacement to fuel regime has an upfront cost of $400 to convert a car from running on gasoline or diesel to running on either liquefied natural gas or compressed natural gas.
Auwalu estimated the number of vehicles in the country to be about eight million public vehicles currently. He added that to convert them to run on natural gas will cost about $3.2 billion to achieve.
According to him, “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 of 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 petrol can be sold at 1,000 Naira. After all, the average distance covered by one-gallon equivalent when you compare it with liquified natural gas or Compressed natural gas with respect to energy for mobility is 2.7 against one. One for petrol, 2.7 for liquified natural gas or Compressed natural gas
”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.”