Notwithstanding denials from government, Nigeria is paying about N907.5 billion subsidy on premium motor spirit (PMS) otherwise called petrol monthly as the depreciation of the naira has pushed the actual cost of litre of fuel to N1,202.7.
Owing to unresolved price differential, over 90 marketers, who were licensed to import petroleum products into the country have been unable to bring in any products almost nine months after President Bola Tinubu announced the deregulation of the downstream segment of the petroleum industry.
Amid these concerns, the Nigerian Association of Road Transport Owners (NARTO), which distributes petroleum products across the country, told The Guardian yesterday that they have concluded plans to down tools as they demand double of the existing transportation allowance, which is ordinarily meant to be determined by market forces.
As the price of diesel moves upward to about N1,400 per litre, NARTO said the cost of diesel from Lagos to Abuja has jumped to N1.4 million compared to the N600,000 it was mid-last year.
With the resumption of the Port-Harcourt Refinery yet to materialise, there are indications that the price control by the government despite deregulation would frustrate Dangote Refinery and others who are now relying on imported crude oil for processing.
As of the fifth week of the year, when the crude oil price was around $78 per barrel, PMS Eurobob delivered to West Africa was $820.27 per tonne. There are 1000 litres in every tonne, which brings the landing price of petrol per litre in Nigeria to $0.8. Going by the official exchange rate of N1,503.4 to a dollar, the landing price of a litre of PMS should cost N1,202.7. Without other transportation fragments and marketers’ margin, the Federal Government is currently paying about N585.5 subsidy on every litre of petrol.
With the country’s daily consumption dropping from about 65 million litres per day to about 50 million litres, the N585.5 per litre subsidy would be N29.28 billion per day and about N907.5 billion monthly.
Via The Guardian