Petrol Marketers in the country, on Thursday, stated that based on the constant fall of the Naira against the United States Dollar and the surge in the price of Crude Oil in the International Market, the pump price of petrol should be between N890 – N900 per litre, as against the current price of N598 – N617 per litre, depending on the location of purchase, .
They also speculated that the commodity is being subsidised by the Federal Government, adding that, the Federal Government may spend about N1.68 trillion as subsidy payment on Premium Motor Spirit, PMS, popularly called petrol, from September to December this year.
This is according to an analysis of data provided by the Oil Marketers.
Recall, that Brent Crude, the global benchmark for Oil, rose to about $95 per barrel, on Thursday. It had peaked to $97 per barrel the preceding day, which was the highest figure in 2023.
Crude Oil had started the year at about $82 per barrel, dipped to $70 per barrel in June, but traded above $94 per barrel in the past week.
Also recall, that as at Thursday, the Naira exchanged against the dollar at N950 to $1.
A Media report on Thursday, indicated that the Federal Government paid N169.4 billion subsidy in August, 2023.
Quoting a Federal Account Allocation Committee, FAAC, document, the report said that the Nigerian Liquefied Natural Gas, NLNG, paid $275 million as dividends to Nigeria via the Nigerian National Petroleum Company Limited, NNPC.
The NNPC, according to the report, used $220 million (N169.4 billion at N770 per $) out of the $275 million to pay for the PMS subsidy in the review month.
“I told you earlier that there is no way that the government will sustain the price of petrol at N617 per litre, without paying subsidy on it, going by the continued fall of the Naira”, the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, IPMAN, Chinedu Ukadike, told The Punch, on Thursday.
He added: “The dollar is almost N990 at the Parallel Market currently, and you can see the effect of this on the pump price of diesel. Diesel is close to N1,000/litre, so the retail price of PMS should be around N890 to N900/litre.
“Therefore, it is better the government assists the masses by paying subsidy. From our records, in the United States, the super product or petrol is sold around $3.9, which is close to about N3,000/litre.
“The premium product is sold at about $2.89, which is over N2,000/litre. And if you check in other African countries, you will find out that the product is being sold at between N1,200 and N1,500. But going by the forex rate in Nigeria, it should be around N900/litre.”
It was gathered that the subsidised ex-Depot price of petrol as sold by the NNPC, was between N585 and N600, depending on the area of purchase, and by subtracting the ex-Depot cost of N600 per litre from the projected unsubsidised rate of N890 per litre, the government may have been spending about N290 per litre as subsidy currently.
In July, data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority showed that between June 1 to June 28, 2023, which was described as the post-deregulation period, the total petrol consumption across the country was 1.36 billion litres, while the average daily consumption was put at 48.43 million litres.
With an average daily consumption of 48.43 million litres, and an estimated subsidy of N290/litre, the government could be incurring N14.04 billion as subsidy daily, while this could rise to N421.3 billion monthly, according to the report.
This could also rise to as high as N1.68 trillion for the months of September, October, November and December 2023, should the Naira continue its fall against the dollar and Crude price maintains its upward surge.
More news later…
