Nigeria’s monthly fuel subsidy payments have surpassed N700bn, say marketers. Explore the reasons and consequences of this high cost.
According to the Independent Petroleum Marketers Association of Nigeria (IPMAN), it is possible for Nigeria’s monthly fuel subsidy expenditure to exceed N700 billion.
On Monday, a statement was released by Mohammed Shuaibu – the Secretary of IPMAN in Abuja-Suleja.
In response to data published by the Major Energies Marketers Association of Nigeria last Wednesday, he noted that as of the day before, petrol’s landing cost was N1,117/liter.
When discussing the MEMAN’s data, Shuaibu argued that it is possible for both the Nigerian National Petroleum Company Limited and the government to be dishonest about how much money is being spent on fuel subsidies.
Nigerians were cautioned to brace themselves for impending fuel pump price increases.
The price of petrol in Nigeria is influenced by the interplay between demand and supply on a global scale. Therefore, if there is an upsurge in fuel prices worldwide, it should also reflect here.
Thus, the price of N1,117 per litre is not solely determined by our foreign exchange rate but also takes into consideration the global PMS cost. The NNPC happens to be the only importer of this product and unfortunately appears to be withholding crucial information from us.
According to our counterparts in major marketing companies, it is evident that the cost of landing petrol exceeds N1,100 per liter. As a result, the monthly subsidy has now surpassed N700 billion.
Shuaibu stated that being ready for any sudden hikes in petrol prices is essential as they have forewarned us beforehand.
Despite repeated insistence from the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, fuel subsidies should continue to be removed in Nigeria.
Upon further examination, it was revealed that gasoline is priced between N617 and N750 per liter based on location. However, merchants claimed that the ex-depot rate for the product established by NNPC is at 585 naira per liter.
The discrepancy between the cost of landing at N1,117 and an ex-depot rate of N585 is a gap of N532.
The Federal Ministry of Petroleum Resources reports that the daily spending on subsidies can be calculated as N23.57 billion, which is derived from multiplying 44.3 million liters of petroleum consumption in October 2023 by the estimated subsidy paid per liter (N532).
The estimated fuel subsidy figure comes to more than N700 billion within a period of 30 days.
The current situation arises from a disagreement between the Nigerian Midstream and Downstream Petroleum Regulatory Authority and Dangote Refinery regarding inadequate quality of petroleum products.
On Monday, Lokpobiri chaired a gathering with the leaders of Nigerian Upstream Petroleum Regulatory Commission and Nigerian National Petroleum Company Limited. During this same time period…
It is worth remembering that Mallam Nasir El-Rufai, the ex-governor of Kaduna State, alleged that compared to previous times, the current Federal government under President Bola Tinubu’s leadership is spending higher amounts on fuel subsidies.
Festus Osifo, the President of the Trade Union Congress, also suggested that the government is implementing a form of fuel subsidy on petrol.
