FG Spends N1.243tn Monthly As Fuel Subsidy Costs N600/litre

'Fuel Subsidy Favours Only The Rich' - AfDB President

The amount paid by the Federal Government as a subsidy on each litre of Premium Motor Spirit, often known as petrol, used in Nigeria is presently above N600, according to oil industry operators on Sunday.

Furthermore, according to the most recent PMS evacuation data acquired from the Nigerian National Petroleum Company Limited (NNPC) on Sunday, Nigeria’s year-to-date daily consumption of petrol was 66.8 million litres.

According to the NNPC data, the Federal Government spends over N40.1 billion every day when subsidizing every litre of fuel used in Nigeria by at least N600. This also implies that the government spends around N1.243tn each month on gasoline subsidies.

Oil marketers said that the price of petrol (if not subsidized, as in Nigeria) was frequently greater than the price of Automotive Gas Oil, also known as diesel. They stated that the current diesel price ranged between N800 and N850/litre, while the authorized subsidised petrol pump price remained at N165/litre. There are no subsidies for diesel.

Other oil industry players, including NNPC’s Group Managing Director, Mele Kyari, have previously reaffirmed their viewpoint. According to this, the Federal Government now pays N600 as a subsidy on every litre of fuel used in the country through NNPC.

“The cost of petrol in Nigeria is about the cheapest in the world. And this is because of subsidies. The subsidy is not small, it is so great,” the Deputy National President, Independent Petroleum Marketers Association of Nigeria, Zarma Mustapha, told our correspondent.

He added, “Diesel is going for about N850/litre currently because there is no subsidy on it. And this means petrol price should be the almost same price if not for subsidy.”

Zarma explained that this humungous subsidy spending by the government through NNPC was unsustainable, stressing that the crisis in the downstream oil sector was now affecting retail outlets seriously.

He said, “Many independent marketers who were selling at the N165/litre price have closed shop over time because it is not sustainable and is killing our businesses.

“So with the current dynamics going on in the industry, it is not realistic to sell PMS at N165/litre. I want to tell you one thing, in the whole world there is no place that petrol is being sold at the price we are selling it in Nigeria.”

NNPC has been the sole importer of petrol into Nigeria for several years. The oil firm has continued to shoulder the burden of subsidy over these years, a development that has been making it unable to make monthly remittances to the Federation Accounts Allocation Committee.

Also speaking on the burden of fuel subsidy on the economy, the President, of Petroleum Products Retail Outlets Owners Association of Nigeria (PROAN), Billy Gillis-Harry, said that the subsidy regime was no longer sustainable.

“We have said it times without number that this subsidy regime is no longer sustainable, as the global crisis in the oil sector coupled with the crash of the naira against the dollar has made it tough for Nigeria,” he said.

The National President, Natural Oil and Gas Suppliers Association (NOGASA), Bennett Korie, had told our correspondent that the current cost of petrol could make one run away if told.

“You can’t buy petrol at a high price and sell this low. Crude oil is about $130/barrel, the cost of fuel, if you hear it, you will run away; but you are selling at N165/litre. So definitely you don’t expect money to remain for government to run other activities when it spends heavily on subsidy,” he stated.

In June last year, the NNPC helmsman explained that the cost of petrol should be more than the N280/litre price of diesel at that time. Kyari had stated that organised smuggling was the reason for the huge petrol consumption volume in Nigeria, stressing that the low petrol price in the country was also an incentive for this.

The NNPC boss had said, “Today we are paying N162/litre (for petrol). I am sure many people buy AGO (diesel) in the market and it is selling at N280/litre in the market today.

“So (there is) nowhere in the world diesel sells more expensive than PMS. That means that the price of petrol anywhere in the world, assuming you are going to sell it at the market, you are going to sell it above that price you have seen.”

Leave a Reply