By Straightnews
Nigerian government spent N15.57 trillion from 2006 to 2023 on the Petrol Motor Spirit (Petrol) subsidy, the Nigeria Extractive Industries Transparency Initiative (NEITI) revealed.
NEITI stated this recently during the unveiling of its 2022 and 2023 Independent Oil and Gas Industry Reports in Abuja.
The report was unveiled by George Akume, Secretary to the Government of the Federation, Ola Olukoyede, the chairperson of the Economic and Financial Crimes Commission (EFCC) and other government officials on Thursday.
According to NEITI’s report, the year with the highest amount paid for fuel subsidy termed as under-recovery and price differentials was N4.714 trillion in 2022.
Recall that during a recent press conferencein Abuja, Independent Media and Policy Initiative (IMPI) had blamed former Military Heads of State, Gen. Yakubu Gowon and ex-President Olusegun Obasanjo for allegedly institutionalising petrol subsidy regime at a time when the Nigerian economy was vibrant.
According to the group, these former military heads of state introduced subsidy as a short-term measure to cushion the rising international oil price, explaining that subsidy was intended as a temporary fiscal response to an oil price spike instigated by the actions of the Organization of Petroleum Exporting Countries (OPEC).
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The report also revealed that the federal government was owed $6.071 billion and N66.4 billion in unpaid revenues from the oil and gas sector as of Jun 2024.
It is gathered that fuel subsidy had been a subject of controversy despite President Bola Ahmed Tinubu announcing its removal in May 2023.
However, the World Bank had hinted that with the price per liter, Nigerians buy petrol, the product is still subsidized.
Former President Olusegun Obasanjo also stated that fuel subsidy is back.
However, the Nigerian National Petroleum Company had clarified that the firm only takes care of petrol importation shortfalls between the company and the federation.
In recent times NNPCL has increased fuel prices to N950 and N1,100 per litre indicating removal products’ subsidy.
Aliko Dangote, the President of Dangote Group recently called on the Nigerian government to completely remove fuel subsidies.
His comments come after Dangote Refinery’s petrol commenced distribution into the Nigerian market on September 15, 2024, through NNPCL.
While Dangote is pushing for complete fuel subsidy removal which will see fuel rise above N1,100 per liter, Nigerians have continued over high energy costs.
Fuel landing cost decreases
Meanwhile, the landing cost of Premium Motor Spirit (PMS), commonly known as petrol or fuel has decreased to ₦981 per litre, as reported by the Major Energies Marketers Association of Nigeria on Thursday.
This reduction marks a decline of over ₦140 from the previous weeks, where the petrol landing cost was approximately ₦1,130, attributed to the recent fall in global crude oil prices as of September 25, 2024.
A recent report by Major Energies Marketers Association of Nigeria, MEMAN on Thursday revealed that the landing cost of Petrol import dropped to N981.08 per litre in September 2024 from N1,130 in July.
Straightnews reports that the prices of crude oil and foreign exchange rates play a significant role in determining the costs of refined petroleum products, including petrol, diesel, aviation fuel, and kerosene.
In August 2024, Brent crude, the global benchmark, was trading at an average of over $80 per barrel but has since fluctuated between $70 and $75 per barrel this month.
On Thursday, it was recorded at $71.41 per barrel, a decrease from the previous day’s price of $73.46 per barrel, according to industry data from the Petroleum Ministry.
Data from Statistica, a global statistical firm, indicated that the average price of a barrel of Brent in August 2024 was $80.36, reflecting a decline from the prior month due to reduced oil demand in China and indications from the organisation of Petroleum Exporting Countries regarding potential production increases.
In light of the falling petrol landing cost and rising pump prices across the nation, major oil marketers have begun importing the product.
NNPCL
The Nigerian National Petroleum Company Limited (NNPCL) previously held the exclusive position of petrol importer into the nation before the recent increase in fuel prices and the initiation of production and distribution by the Dangote Petroleum Refinery.
On September 18, 2024, three prominent oil marketers anticipated the arrival of vessels carrying imported petrol the previous week, contingent upon any unforeseen events.
The marketers indicated that approximately 141 million litres of Premium Motor Spirit (PMS) were being transported to Nigeria by these vessels following the federal government’s complete deregulation of the downstream oil sector.
They confirmed on Thursday that some of these vessels had indeed reached Nigerian shores.
This development coincides with the Dangote oil refinery increasing its local petrol production after more than twenty years of reliance on fuel imports.
According to the Major Oil Marketers Association of Nigeria (MEMAN), the landing cost of petrol began to decline in mid-July, dropping below N950 in early September.
Notably, this decrease occurred despite the appreciation of the dollar against the naira, with the landing cost calculated at ₦1,667.22 per dollar.
As of Wednesday, MEMAN reported that the average ex-depot price of petrol ranged from ₦865 to N1,200 in Lagos, ₦980 to ₦1,400 in Calabar, and ₦1,200 to N1,400 in Port Harcourt.
The major marketers also revealed that the landing cost of diesel is currently N1,089 per litre, while aviation fuel is priced at ₦1,117.34.
It was noted that the average ex-depot price of diesel is approximately ₦1,165 in Lagos and ranges from ₦1,200 to ₦1,200 in both Calabar and Port Harcourt.
Furthermore, it was observed that the price difference between imported petrol and that produced by Dangote could be ₦83, assuming a purchase price of ₦898, which the Nigerian National Petroleum Company claimed to have paid for Dangote’s fuel.
Although officials from the $20 billion refinery have denied selling their fuel at N898 to the NNPC, they have not provided an alternative figure for over a week.
It is worth mentioning that the NNPC raised petrol prices on the same day that the Dangote refinery launched its locally-produced fuel.
The NNPC has announced that it will offer petrol sourced from the Dangote refinery at prices exceeding ₦1,000 per litre in the northern regions of the country.
Recently, the NNPC spokesperson, Olufemi Soneye, said the price could reach as high as ₦1,019 per litre in areas such as Borno State, while it may be set at ₦999.22 in cities like Abuja, Sokoto, and Kano.
In Akwa Ibom State, a litre of petrol costs between N1300 and N1400 at filling stations.
The lowest recorded price, as indicated in an infographic shared by the NNPC, is ₦950 in Lagos and its surrounding areas.
However, it has been noted that petrol prices can soar to ₦1,200 or more in certain locations across Nigeria, while some major retailers continue to offer a litre for ₦910 in Lagos.
However, the sale of PMS to NNPC continues at the Dangote refinery as Nigerians are hopeful that the price of PMS will crash when the naira crude sale begins on October 1, 2024.
Straightnews finding shows that a litre of petrol costs between N1300 and N1400 at filling stations while transport fares have risen to 100 per cent increase.
Few days ago, Independent Petroleum Marketers Association of Nigeria, IPMAN and National Union of Petroleum and Natural Gas Workers (NUPENG) suspended strike over altercation with Joint Task Froce that led to scarcity of fuel in the state, yet the suspension is doing more harm than good in that petroleum marketers are yet to reduce the high cost of petrol per litre, thus compounding economic woes to the citizens.
