The Nigerian National Petroleum Corporation on Thursday called on the Federal Government to scrap the Petroleum Support Fund (PSF) otherwise known as petroleum subsidy because government should not guarantee the price of crude oil that it does not control.
In his presentation during the 2015 Oloibiri Lecture and Energy Forum of the Society of Petroleum Engineers (SPE) in Abuja, the corporation’s Group Executive Director, Corporate Strategy and Planning, Dr. Timothy Okon, described subsidy as the difference between the landing cost of petroleum products and the price for which it is sold.
The theme of the lecture was: “Global Oil Price Dynamics: Impact and Strategic Solution for Nigeria.
He explained that since government does not control the prices of crude oil, its fluctuation creates a fiscal instability in the country.
“The manner in which the prices were result in government becoming the payer, fiscally guaranteeing the price which we do not control. That created fiscal instability,” he said.
According to him, because of nature of oil prices, the government has now become the payer who guarantees the price that is not within its control.
Okon also posited that the oil subsidy is a first line charge removed from the revenue before it is shared among the three tiers of government.