The landed cost of premium motor spirit, also known as petrol, was N1,117 per litre as of Tuesday, July 16, 2024, the Major Energies Marketers Association of Nigeria disclosed on Wednesday.
MEMAN disclosed this on Wednesday during a webinar with journalists. The association revealed that the landed cost of aviation fuel was N1,127 per litre while the landed cost of diesel was N1,157 per litre. Journalists report that the landed cost of petrol in Nigeria was N1,117 per litre, far more than the pump price of the product in Nigeria.
Currently, filling stations and major distributors owned by the Nigerian National Petroleum Corporation sell PMS at a price between 617 and 660 naira per litre, while independent distributors sell it for over 700 naira per litre. NNPC, the sole importer of petrol in Nigeria, has always denied subsidizing the cost of PMS but refuses to disclose the cost of delivery of the product.
Our correspondents report that MEMAN’s revelation is almost a first from an industry marketer as the delivery cost appears to have been kept secret by PMS importers. MEMAN Executive Secretary, Clement Isong, said the cost was sourced from an independent energy price benchmark provider. The association maintained that it would regularly publish similar information to inform the public. Recently, independent petroleum marketers accused private depot owners of increasing depot prices of petrol from N630 to N720 per litre.
Prof. Wumi Iledare, an energy sector expert, told our correspondent in an interview that the cost of PMS in Nigeria is far below the international price when diesel prices are taken into account.
“The gap between diesel and petrol prices in Nigeria is huge. It is not as much anywhere in the world. That means something is wrong.
“I don’t know if NNPC is paying subsidies or not, but somebody is absorbing the difference. You can call it under-recovery or subsidy, but the price of petrol today does not reflect the market cost of producing a litre of petrol,” he explained.
Iledare added that at the current exchange rate, the price of petrol should not be below 80% of the price of diesel. Adeola Adenikinju, professor of economics at the University of Ibadan and president of the Nigerian Economic Society, confirmed this, saying: “The current price of PMS is being subsidized by the government. The government buys at higher rates and sells to us at subsidized rates. That is what they call under-recovery.”
The International Monetary Fund recently warned the Nigerian government to eliminate so-called implicit fuel and power subsidies.
In a recent report released by the IMF, the IMF told Nigeria that subsidies would consume 3 percent of the gross domestic product in 2024, compared to 1 percent the previous year.
President Bola Tinubu announced the removal of fuel subsidies at his inauguration on May 29, 2023.
However, the IMF found that “adequate compensatory measures for the poor were not scaled up promptly and subsequently paused over corruption concerns. Capping pump prices below cost reintroduced implicit subsidies by end-2023 to help Nigerians cope with high inflation and exchange rate depreciation.”
However, the NNPC and the Federal Government have vehemently denied that the current price of PMS is a subsidy.
