The Federal Government of Nigeria through the Nigerian National Petroleum Corporation (NNPC) is spending an average of N4.355 billion daily to subsidise Premium Motor Spirit (PMS) also known as petrol, New National Star has learnt.
According to Mike Osatuyi, the National Operations Controller, Independent Petroleum Marketers Association of Nigeria (IPMAN), the expected market price for petrol retail in the months of March and April is N230 per litre, while the expected market price for February was N216 per litre.
Osatuyi said, “If you are talking of spot price, that is if you want to buy crude today or about a week ago before the OPEC meeting, the pump price will be N230. That will be the average for March and the pump price will also be N230 per litre when we get to April.” New National Star learned from industry sources that Nigeria consumed an average of 67 million litres per day in January which added up to 2.077 billion litres in 31 days. Currently, filling stations round the country sell a litre of petrol for between N162 and N165.
The difference between the expected market price of N230 and the current petrol price per litre of N162, stands at N68 daily. Calculations by this newspaper put the average cost the NNPC is spending per day on subsidy at N4.556 billion, when the subsidy per litre of N68 is multiplied by 67 million litres daily demand. In April 2020, news outlets across the country reported that the Nigerian government had bowed to the long-standing pressure to restructure the downstream sector of the oil industry and had ended the era of subsidising petrol.
At the time, Mele Kyari, the Group Managing Director of the Corporation was quoted saying, “There is no subsidy and it is zero forever, going forward there will be no resort to either subsidy or under-recovery of any nature.” In April 2020, the cost of a barrel of Bonny Light crude oil was $14.28 and in May of the same year, it was $27.9. The low pricing of crude was caused by the oil price war between Saudi Arabia and Russia and the lid put on most economic activities as a result of the lockdown measures enforced by most countries across the world to curb the spread of COVID-19. Experts believe that the removal of petrol subsidy was easier at the time due to the low prices of crude oil.
The pump price of petrol in April 2020 was N123, which was reflective of low crude oil prices. In the months following April, crude oil prices slowly climbed. In February 2021, a barrel of Bonny Light crude oil sold for $66.260, the price of Brent Crude stood at $69.36 per barrel, while that of WTI Crude was $66.09 per barrel, climbing to the highest they had been in 13 months. Marketers said then that the expected market price for petrol retail with the current realities in the global crude oil market would be between N185 and N200 per litre.
Queues formed in front of filling stations in major cities across Nigeria as February drew to an end. Osatuyi was quoted saying earlier in March that Kyari has told retailers that the petrol pump price would go up to N206 per litre.
The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROOAN) asked the Nigerian government to raise the pump price to N175 while NNPC insisted that there was not going to be any increment in the petrol pump price in the months of February and March.