Fuel Subsidy Is ‘Accounting Magic,’ Accord Party’s Olawepo-Hashim Says Petrol Overpriced In Nigeria

Accord Party presidential aspirant, Gbenga Olawepo-Hashim, has described Nigeria’s long-running fuel subsidy debate as “accounting magic,” arguing that the high price of petrol is largely a consequence of how the government accounts for and prices domestically produced crude oil.

Hashim, who spoke on Channels Television’s Politics Today, said Nigerians have been made to believe that the country cannot afford cheaper petrol when, in his assessment, the actual cost structure suggests otherwise.

According to him, the price of petrol is currently inflated because Nigeria prices its domestic crude at a level he considers excessively high.

“The truth of it is that the price is currently inflated. By who? By the government,” Hashim said.

He explained that the domestic crude price, which he attributed to Nigerian National Petroleum Company Limited (NNPCL)statistics, stands at about $30 per barrel. He contrasted this with Saudi Arabia, where he said the production cost is about $10 per barrel.

Hashim said adding a $15 margin to the $30 production cost, alongside approximately $5 for refining and $7 for transportation and insurance, would put the total at about $57 per barrel.

Based on his calculation, he said this could translate to a petrol price of about 34 cents, or roughly N501 per litre at an exchange rate of N1,400 to the dollar.

Hashim said his proposed N605 per litre pump price would therefore include an additional energy tax of about N100, which he said could be deployed to develop alternative energy sources.

He argued that the arrangement currently described as fuel subsidy should instead be examined through the lens of accounting and domestic crude pricing.

“What you have had really has never been any subsidy, even when we had lower pump petrol prices. The subsidy issue is more of an accounting magic,” he said.

The Accord Party chieftain maintained that Nigeria should not price crude supplied to its domestic market at the same rate as crude sold internationally.

According to him, international crude pricing represents an opportunity price and should not automatically determine the cost of crude allocated for domestic consumption.

“You cannot price your local products at international price,” Hashim said.

He cited Saudi Arabia and Kuwait as examples of oil-producing countries that, according to him, do not apply international crude prices to their domestic markets in the manner Nigeria does.

He argued that the disparity warranted greater scrutiny of Nigeria’s oil production costs, suggesting that “a lot of over-invoicing” could be involved and that explanations were needed for the high domestic crude price.

“If anyone has a different idea, they should bring their books. Let’s see what it is, how much it costs to produce a barrel of crude in Nigeria,” he said.

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