Report Discloses New Amount FG Pays For Fuel Subsidy

A report has indicated that the Federal Government through the Nigerian National Petroleum Company Limited (NNPC Ltd) is now spending N17.72 billion daily to fund subsidy on petrol.

An executive of a major petroleum marketing company in Lagos told Vanguard that the N17.7 billion subsidy cost represents the difference between landing cost of imported petroleum products and effective wholesale price to petroleum marketers.

The immediate past public relations officer of the Independent Petroleum Marketers Association of Nigeria, IPMAN, Chief Chinedu Ukadike also told the aforementioned publication that the rise in petrol price is largely driven by the low value of the Naira to the Dollar.

Ukadike explained that while crude oil price has remained largely stable in the past one year, the Naira has continued to tumble against the dollar.

He argued that it is impossible for anyone to claim that the price of petrol has not changed significantly from when the exchange rate was N750/dollar when the subsidy was removed last year to now when the rate has moved to ₦1,600/dollar.

According to him, “Because NNPC is the sole importer of PMS in this country, it is very difficult for anyone to say for sure the actual cost of importing PMS into the country. Simple mathematics will tell you that the price cannot be the same when a dollar was exchanged for N750 and now that it is ₦1,600 to a dollar. What this means is that the price is above ₦1,000 per litre.

“So, the foreign exchange determines the price at the local market and if forex rate has increased, invariably, the landing price of petroleum products has also increased by same magnitude. I don’t know the magic through which they continue to sustain the price of PMS at the same level.”