Petrol Subsidy Rises To N500bn
With the Federal Government leaving the pump price of Premium Motor Spirit (petrol) unchanged in the first five months of this year despite the increase in global oil prices, subsidy on the product is estimated to gulp N500bn in the period.
The Economic Confidential had reported on January 11 that the sustained increase in global crude oil prices had pushed up the landing cost of imported petrol closer to the current pump prices of the product in Nigeria, and appeared to have triggered a return to petrol subsidy era.
Going by the petrol pricing template of the Petroleum Products Pricing Regulatory Agency, the landing cost of petrol rose from an average of N143.60 in December to N158.53 per litre on January 7, with the expected open market price (retail price) being N181.53 per litre.
On February 5, when oil price neared $60 per barrel, it was reported that the expected open market price of petrol rose to over N200 per litre, based on the petrol pricing template of the PPPRA.
The pump price of petrol has remained at between N160 and N165 per litre at many filling stations in Lagos since December.
The Group Managing Director, Nigerian National Petroleum Corporation, Mele Kyari, said on March 25 that the Federal Government was subsidising petrol with about N100bn to N120bn monthly.
He said while the actual cost of importation and handling charges amounts to N234 per litre, the government had been selling at N162 per litre, therefore, bearing the difference.
“Today, NNPC is the sole importer of PMS. We are importing at market price and we are selling at N162 per litre today. Looking at the current market situation today, the actual price could have been anywhere between N211 and around N234 per litre,” Kyari said at the time.
Petrol subsidy would gulp N480bn from February to May, based on the monthly figure given by the NNPC boss, while the corporation is estimated to have spent at least N20bn subsidising the product in January.
The National Operation Controller, Independent Petroleum Marketers Association of Nigeria, Mr Mike Osatuyi, said it had become clear that petrol subsidy had reemerged.
“They are no more deceiving us; they have told us the truth that there is subsidy. So, we will continue to carry the burden until when the infrastructure to cushion the effects of high petrol price is put in place by the government,” he added.
Asked if marketers were comfortable with the return of subsidy, he said, “We have no choice because it is the government that is importing petrol. They have the knife and the yam. So, they are to tell us where to go, and we have no choice but to comply.”
The Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, said the announcement by the NNPC that the ex-depot price of petrol would not change in May meant that subsidy would continue. “It means status quo remains; everything continues as it is,” he added.
For more than three years, NNPC has been the sole importer of petrol into Nigeria, and depot owners, major and independent oil marketers rely on it for the supply of the product.