According to oil marketers’ projections on Monday, the monthly subsidy on Premium Motor Spirit, also known as petrol, has grown to around N707bn, given its landing cost of N1,117 per litre.
Additionally, it was learned that the $21 billion company may export gasoline once the Dangote Petroleum Refinery starts producing it in August due to the difficulty in the supply of crude oil and other regulatory issues.
This occurred during a meeting between representatives of the Dangote refinery, Nigerian National Petroleum Company Limited, the Nigerian Upstream Petroleum Regulatory Commission, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, and the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri.
The conference that took place in Abuja on Monday focused on the recent issues that regulators and operators in the oil sector had with the Dangote plant.
Also, the House of Representatives inaugurated an investigative committee to look into the non-availability of crude oil to domestic refineries and allegations of a deliberate hike in the cost of the product for profiteering. Last Wednesday, the Major Energies Marketers Association of Nigeria stated that the landing cost of petrol as of the preceding day was N1,117/litre.
This came as the Independent Petroleum Marketers Association of Nigeria insisted that the Federal Government was still subsidising PMS. IPMAN stressed that this was not sustainable and might lead to an increase in the pump price of gasoline soon. MEMAN also revealed last week that the landing cost of diesel was N1,157/litre, while that of aviation fuel was N1,127/litre.
While the pump prices of diesel and aviation fuel are considerably higher than their landing costs, the pump price of petrol is way lower than its landing cost.
Although retail outlets operated by the Nigerian National Petroleum Company Limited and some major marketers dispense petrol at between N617/litre and N670/litre, dealers said the ex-depot price of the commodity by NNPC is N585/litre. Independent marketers hardly get the product at the N585/litre ex-depot price. They mostly buy from private depot owners at higher rates, findings show. This makes their pump prices much higher. Some of them dispense the commodity above N700/litre.
NNPC is Nigeria’s sole importer of petrol. Other dealers stopped importing the commodity due to their inability to access the United States dollar, required for PMS imports.
The difference between the landing cost of N1,117 and an ex-depot price of N585 is N532. This implies that every litre of petrol consumed in Nigeria is subsidised by about N532. Nigeria consumes tens of millions of litres of petrol daily. There are different gasoline consumption figures from various agencies of the Federal Government.
NNPC, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, and the Federal Ministry of Petroleum Resources have stated different figures ranging from 66.8 million litres in September 2022 to 44.3 million litres in October 2023. When the most recent daily PMS consumption figure of 44.3 million litres is multiplied by the N532 subsidy reportedly paid on each litre of petrol, it gives N23.57bn as the daily subsidy spending.
This means that in 30 days, the petrol subsidy should gulp about N707bn. The Secretary of IPMAN, Abuja-Suleja, Mohammed Shuaibu, said that though the Federal Government and NNPC had claimed that there was no subsidy on petrol, the latest figures by MEMAN proved otherwise. He said the petrol subsidy was over N700bn monthly considering the landing cost of the commodity, as revealed by MEMAN.
“Petrol prices are determined by the forces of demand and supply in the international market. When there is a global price increase, we should experience it in Nigeria. Therefore, the N1,117/litre is not just based on our foreign exchange rate but also the global PMS cost. The sole importer of this product is NNPC, and the company is not telling us the truth.
“But data sourced by our counterparts, the major marketers, showed clearly that the landing cost of petrol is above N1,100/litre. This means that the monthly subsidy has crossed N700bn. That also means we should be prepared so that any time the price of gasoline jumps, we should not be surprised because they have already told us,” Shuaibu stated.
The IPMAN official insisted that if the government was not subsidising petrol, it should have allowed the full deregulation of the downstream sector.
“Of course, you know NNPC will hide this information from you. Former Kaduna State Governor, Nasir El-Rufai, stated a few months ago that the Nigerian government is not telling Nigerians the truth about fuel subsidies because they are still paying subsidies.
“If they are not paying, why is it that up until now only NNPC is importing petrol when they claim that they have liberalised the market? They should open the market to competition by allowing investors to come in and compete favourably. This will crash the price of the product.
“But where only one entity controls the importation of PMS, then the sector has not been deregulated. That is why we feel NNPC is economical with the truth by saying that it is not subsidising petrol,” Shuaibu added.
In April, El-Rufai told journalists in Maiduguri that many citizens were not aware that the government had reintroduced the PMS subsidy.
“The Federal Government is now subsidising fuel; many people don’t know this. It is the right policy. I have always supported the withdrawal of oil subsidies, but in the course of implementing the policy, the government realised that subsidy has to be back. Right now, the government is paying a lot of money for subsidy, even more than before.
“You start implementing a policy because you are sure it is the right policy, but in the course of implementation, you come across bottlenecks and you modify.
“The keyword in leadership, in my view, is pragmatism. You should be pragmatic. So, when you make a policy, you start implementing it, and if it doesn’t seem to work well, you should have the humility to stand back and say this is not working, and you modify it,” El-Rufai had stated.
