Nigeria’s daily fuel subsidy drops to N1.07 billion

NIGERIAN-FUEL-STATIONThe Federal Government’s daily spending on petrol subsidy may dropped from the N2.4 billion it recorded in June to N1.07 billion as at Monday this week.

Specifically, the country’s daily subsidy per litre of fuel has decreased from the N51.61per litre it recorded on June 11 to N22.42 per litre.

The Petroleum Products Pricing Regulatory Agency (PPPRA), which made this disclosure on Monday in its pricing template , put the expected open market price of the product at N109.42.

Based on daily petrol consumption of 48 million litres, the total subsidy cost on the product as of September 7, would amount to N1.07 billion at N22.42 per litre.

The landing cost of Premium Motor Spirit (PMS), otherwise known as petrol, has also dropped from N123.12 per litre to N93.93, while the Expected Open Market Price declined fromN138.61 per litre N109.42.

Subsidy refers to the money paid by the government, to keep prices below what they will otherwise be in a free market system.

Nigeria, which relies on importation for most of its fuel needs as the country’s refineries are in a poor state, has seen a drop in importation of refined petroleum products in recent months, leading to acute scarcity of the products across the country.

Nigeria export all its crude oil produced and has not been earning much since the decline in prices.

The global benchmark Brent crude lost almost half of its value since June last year, plunging below $40 per barrel.

September West Texas Intermediate (WTI) crude oil futures fell by 2.23 per cent and were trading at $44.15 per barrel on Monday, in the electronic session in NYMEX.

Prices fell due to oversupply concerns and economic growth concerns across Europe and China.

Chinese crude oil imports fell by 13 per cent in August 2015, compared to August 2014—to 26.59 million tons.

The slowing Chinese demand for crude oil in the oversupplied market will continue to fuel pessimistic sentiments in the crude oil market.

The landing cost of petrol was put at N75.15 per litre on January 23, with a subsidy of N3.64 per litre, almost a week after the Federal Government reduced the pump price of the product by N10 per litre.

Meanwhile, PPPRA confirmed to The Guardian yesterday that it has approve supplementary import allocations for at least 300,000 tonnes of petrol for the remainder of the third quarter.

The allocations, which enable the companies that hold them to import fuel under the country’s subsidy regime, are in addition to the 1.5 million tonnes issued for the third quarter earlier this year to at least 37 importers.

  • amador kester

    Puzzling nation, hope the subsidy never sky rockets again

  • Emmanuel Egbumokei

    ” daily petrol consumption of 48 million liters”? I don’t believe this figure is genuine. It was 12 million in 2012 and moved up to 47.7 million in 2013. Please how can this be correct? Did the number of cars in Nigeria triple or what or did the number of petrol generators triple? This is another word for Fraud! Once subsidy is removed we shall discover that our daily consumption would “decline” to the true figure. All those ghost consumption would disappear!

    • Martino

      These guys have not factored-in the improved power supplies which has drastically diminished generator usage. Most filling stations around Amuwo-Odofin, Lawanson, Oshodi are empty with attendants lazing around and yet they are still computing with old estimates. Corruption must be investigated in this agency.

    • JUSTICE75

      Ask GEJ

    • Olaiye123

      the number of generators increase and 10 liters per night per household, shops, etc. Nigeria is a big country and statistics is scares which is probably why I think the 12m in 2012 was not correct, and on the otherside, the refineries were running before the TAM of 2013.

  • emmanuel kalu

    if they are saying that petrol is now 109, people have being buying the product for 100-120. why doesn’t the govt just increase the official rate to the market rate that people are paying. we need to stop this madness and stop wasting money.

  • New Nigerian

    …we expect Subsidy to drop to zero naira per month by end of year, it’s already dropped by about 50%…We support Buhari’s administration in sustaining the multi-pronged strategy and actions for achieving that….graceful removal/winding down the subsidy (to avoid shutting down the country)…once it is wound up, forensic analysis should then be carried out on what got paid and what should have been paid while the bogus subsidy lasts…how did PDP administration come up with the figure of 48million liters daily consumption of petrol for example? who was been subsidized? …all these need to be looked at…