TUC seeks crude subsidy for Dangote, modular refineries

Precious Anga

Lagos — The Trade Union Congress has urged the Federal Government to introduce a crude supply subsidy for Dangote Refinery and modular refineries to reduce the rising cost of petrol across the country.

TUC President Festus Osifo said the union was not asking for the return of the controversial fuel subsidy regime scrapped in 2023, but rather a targeted production support system that would allow local refiners to produce petrol at lower costs.

Speaking on Channels Television’s Politics Today on Friday, Osifo argued that the government could channel part of the excess revenue earned from higher crude oil prices into supporting domestic refining.

According to him, Nigeria currently earns far above its budget benchmark from crude exports and should use part of the additional earnings to cushion the impact of rising fuel prices on citizens.

“So today we make at least $35 per barrel beyond what we budgeted,” Osifo said.
“What we proposed, knowing they would not want to bring back consumption subsidy, was a production subsidy.”

He explained that the proposal would involve subsidising crude supplied to local refineries, including Dangote Refinery and smaller modular plants, to lower the eventual pump price of petrol.

“Why don’t you take part of that excess revenue and subsidise the crude you are giving to Dangote Refinery and modular refineries so they can produce cheaper PMS?” he asked.

Petrol prices have climbed sharply in recent weeks, rising from around ₦800 per litre in some locations to as high as ₦1,300 following tensions in the international oil market triggered by the growing conflict involving Iran, Israel and the United States.

The increase has renewed pressure on the Federal Government over worsening living conditions, transport costs and inflation.

Despite the growing public outcry, the government has maintained that it will not return to the former subsidy system.

Nigeria’s Coordinating Minister of the Economy and Minister of Finance, Taiwo Oyedele, recently reiterated the administration’s position during an event in Paris, insisting that fuel subsidy and price controls distort the economy and discourage investment.

“We will not bring back fuel subsidy because it creates distortions for the economy, and we won’t introduce price control because we believe in the market,” Oyedele said.

Osifo, however, argued that government must develop practical interventions to protect Nigerians from the full impact of volatile fuel prices.

The TUC proposal comes amid growing expectations that local refining capacity, particularly from the 650,000 barrels-per-day Dangote Refinery and emerging modular refineries, could eventually stabilise fuel supply and reduce dependence on imports.

Industry analysts say subsidising crude supply to domestic refineries instead of subsidising petrol consumption could reduce pressure on foreign exchange demand while encouraging local production.

They, however, warn that implementation would require transparency and strong regulation to prevent abuse and ensure the benefits reach consumers through lower pump prices.