With a landing cost of N1,117 per litre for Premium Motor Spirit, commonly known as petrol, the monthly subsidy on the commodity has increased to approximately N707 billion, as projected by oil marketers on Monday.
Last Wednesday, the Major Energies Marketers Association of Nigeria stated that the landing cost of petrol as of Tuesday was N1,117 per litre. The Independent Petroleum Marketers Association of Nigeria (IPMAN) has insisted that the Federal Government is still subsidizing Premium Motor Spirit (PMS). IPMAN has stressed that this practice is not sustainable and may lead to an increase in the pump prices of petrol in the near future. Furthermore, the Midstream and Downstream Petroleum Regulatory Authority (MERA) revealed last week that the landing cost of diesel is ₦1,157 per liter, while the landing cost of aviation fuel is ₦1,127 per liter.
While the pump prices of diesel and aviation fuel are considerably higher than their respective landing costs, the pump price of petrol is significantly lower than its landing cost. Although retail outlets operated by the Nigerian National Petroleum Company Limited (NNPCL) and some major marketers are dispensing petrol at between ₦617 per liter and ₦670 per liter, independent dealers have stated that the ex-depot price of the commodity by NNPCL is ₦585 per liter.
Independent marketers rarely obtain the product at the ₦585 per liter ex-depot price. They predominantly purchase from private depot owners at higher rates, as evidenced by the findings. This results in their pump prices being much higher, with some dealers dispensing the commodity at above ₦700 per liter. It is noteworthy that NNPCL is the sole importer of petrol in Nigeria. Other dealers have ceased importing the commodity due to their inability to access the United States dollar, which is required for PMS imports.
The difference between the landing cost of ₦1,117 and the ex-depot price of ₦585 is ₦532. The price of petrol consumed in Nigeria is subsidized by approximately N532 per litre. Nigeria’s daily petrol consumption is estimated to be in the tens of millions of litres, with varying figures reported by different agencies of the Federal Government. The Nigerian National Petroleum Corporation (NNPC), the Nigerian Midstream and Downstream Petroleum Regulatory Authority, and the Federal Ministry of Petroleum Resources have provided varying figures for the daily Premium Motor Spirit (PMS) consumption, ranging from 66.8 million liters in September 2022 to 44.3 million liters in October 2023.
When the most recent daily PMS consumption figure of 44.3 million liters is multiplied by the reported subsidy of N532 per liter of petrol, it amounts to a daily subsidy expenditure of N23.57 billion. This implies that the petrol subsidy could reach approximately N707 billion over a 30-day period.
The Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Abuja-Suleja chapter, Mohammed Shuaibu, stated that despite the claims by the Federal Government and NNPC that there is no subsidy on petrol, the latest figures provided by the Midstream and Downstream Petroleum Regulatory Authority (MEMAN) suggest otherwise. He further stated that the petrol subsidy is estimated to exceed N700 billion monthly, considering the landing cost of the commodity as revealed by MEMAN.
Shuaibu explained that the price of petrol is determined by the forces of demand and supply in the international market.
When there is a global price increase, it should be reflected in Nigeria. Therefore, the price of N1,117 per litre is not solely based on the foreign exchange rate but also on the global PMS cost. He asserted that the NNPC, as the sole importer of this product, is not providing accurate information to the public.
The cost of petrol has exceeded N1,100 per liter, which indicates that the monthly subsidy has surpassed N700 billion. This suggests that we should be prepared for potential fluctuations in petrol prices, as the government has already provided this information.
