On Wednesday, the Major Energies Marketers Association of Nigeria revealed that as at Tuesday, July 16th 2024, Premium Motor Spirit (petrol) had an estimated landing cost of N1,117 per litre.
During a webinar held on Wednesday with journalists, MEMAN revealed this information.
According to the association, the cost of landing diesel was N1,157 per litre and aviation fuel cost N1,127 per litre.
In Nigeria, the pump price of petrol is much lower than its landing cost which amounts to N1,117.
Currently, PMS is sold at filling stations run by the Nigerian National Petroleum Company Limited and major marketers for prices ranging from N617/litre to N660/litre. On the other hand, independent marketers charge as high as N700 per litre or more for their products.
NNPC, which imports petrol into Nigeria exclusively, has repeatedly refuted allegations of subsidizing the expense of PMS. However, it declined to reveal the product’s landing cost.
As per our correspondent’s report, the disclosure made by MEMAN is one of the rare instances where marketers in this sector have shed light on landing costs. It seems that till now, importers of PMS had kept this information hush-hush.
According to Clement Isong, the Executive Secretary of MEMAN, the expenses were acquired from unbiased providers who established energy price benchmarks.
The organization affirmed its commitment to periodically disseminating comparable details in order to keep the public well-informed.
Independent oil marketers have claimed that private depot owners increased the ex-depot price of petrol from N630 to N720 per litre.
During an interview with our correspondent, Prof Wumi Iledare – a specialist in the energy sector, stated that compared to diesel prices, PMS cost in Nigeria is significantly lower than the international market rate.
There is a significant difference in the prices of diesel and petrol in Nigeria, which is not observed globally. This suggests that something may be amiss.
The speaker revealed that although he is uncertain if NNPC is providing subsidies, it appears as though an entity has taken on the cost difference. He stated that whether one refers to this situation as under-recovery or subsidy, current petrol prices do not accurately reflect its market production expense per litre.
According to Iledare, the price of petrol ought to be at least 80 percent that of diesel given the present exchange rate.
Supporting this claim, Adeola Adenikinju, the President of the Nigerian Economics Society and a Professor of Economics at the University of Ibadan stated that “The existing cost for PMS is being subsidized by the government. The government procures it at higher prices but sells to us below market rates which is known as under-recovery.”
Recently, the Nigerian government was cautioned by the International Monetary Fund to eradicate perceived fuel and electricity subsidies.
Recently, the IMF published a report advising Nigeria that subsidies would consume three percent of its Gross Domestic Product in 2024 compared to one percent from the preceding year.
The removal of fuel subsidies was announced by President Bola Tinubu during his inauguration on May 29, 2023.
Although the IMF acknowledged that measures to support impoverished individuals were not quickly expanded and subsequently suspended due to corruption fears, it was noted that pump prices would be capped below actual cost by the conclusion of 2023 in order for Nigerians to deal with rising inflation rates and currency depreciation. This move will result in implicit subsidies being reintroduced.
Despite widespread speculation, both the NNPC and Federal Government have adamantly refuted allegations of subsidizing the present cost of PMS.
