Kalu Aja, a financial analyst and educator, has said that only a stronger Naira and increased oil output could make the price of Premium Motor Spirit (PMS) fall in the country.
He stated that without a strong Naira, the only way to get “cheap” PMS is through a subsidy on the dollar or a subsidy on crude oil for the Dangote refinery.
Aja explained that a stronger Naira implies that Nigerians could afford $80 per barrel of Brent crude, even with the N70,000 minimum wage.
In a post on his X handle on Thursday, the financial expert stressed that more oil output means Nigeria could sell more oil and use the excess output, above the OPEC quota, to supply subsidized crude to the Dangote refinery.
Aja further pointed out that returning to subsidies is problematic as the scheme itself is costly, insisting that the Federation cannot afford a total subsidy because various levels of government are poor money managers.
Aja’s post read: “How can the PMS price fall?
More local refineries? No.
Dangote paying in Naira for oil? No.
“Rather, a stronger Naira and more oil output.
“A stronger Naira means Nigerians can afford $80 per barrel of Brent crude, even with the $0.27 minimum wage (N70,000 x 40 hrs).
“More output means Nigeria can sell more oil and use the excess output above the OPEC quota to supply subsidized crude to the Dangote refinery at N100 a barrel. Yes, a subsidy.
“In summary, if the Naira does not rise, your PMS cost will not fall.
“The only way to get ‘cheap’ PMS without a strong Naira is to subsidize PMS by subsidy on the dollar or a subsidy on crude for Dangote.
“Subsidy must return for this to happen.
“The problem is that subsidy is a cost, and the Federation cannot afford a total subsidy. The Federation are awful money managers.
“Solutions: We will talk about this soon; it involves bringing back subsidy payments, but at the pump, not the ports, maybe the refinery.
“Last point: It would have been worse without the Dangote refinery.
“Thank you, Dangote.”