Despite the fall in global crude oil prices, its harsh impact on Nigeria’s revenue and the current petrol scarcity in many cities, the Federal Government is still subsidising by N10.58 for every litre of the product consumed across the country, latest figures from the Petroleum Pricing Regulatory Agency have shown.
This is coming as fuel scarcity in Abuja and neighbouring states of Kaduna and Nasarawa continued on Monday. The queues by motorists at the few filling stations that had the product to sell stretched farther than they were previously.
Experts in the oil and gas sector have urged President Muhammadu Buhari to stop subsidising petrol, explaining that aside from the fact that it would check the illegalities in the system, the removal of subsidy would also help address the issue of fuel scarcity.
They also noted that the fall in oil prices was another reason why subsidy on petrol should be stopped as the government’s revenue from crude sales was being badly hit by the plunge in the product’s cost.
Available data from the Central Bank of Nigeria on Monday put the crude oil price at $42.42 per barrel. The price of crude oil has continued to fall in the past one year, shedding about $100 during this period.
The latest figures from the Petroleum Products Pricing Regulatory Agency, based on average Platts prices for November 20, showed that the Expected Open Market Price of petrol, which is the summation of the landing cost plus the subtotal margins, was N97.58 per litre.
This is against the approved retail price of N87 per litre, indicating that the Federal Government is subsidising the product by N10.58 for each litre sold to consumers.
Figures from the Nigerian National Petroleum Corporation also showed that an average of 40 million litres of petrol is consumed on a daily basis throughout the country.
By implication, the Federal Government will be paying about N423.2m to importers daily as subsidy on petrol sold in the nation.
The continued payment of subsidy to oil marketers by the government has been a contentious issue among stakeholders in the sector.
Last week Tuesday, the Minister of State for Petroleum Resources and Group Managing Director, NNPC, Dr. Ibe Kachikwu, stated that the Federal Government might review the fuel prices by January and explained that the subsidy regime was no longer sustainable.
Kachikwu had said, “Frankly, sustaining subsidy based on the rate that we have now is a major problem for the country and is only happening through the magnanimity of the President. We are looking at the price modulations.
“By January, we will have a price modulation dynamism that will enable us to address the critical issues with the marketers. But the issue of price reduction is not in the horizon at all.”
Similarly, a former Governor of the CBN, Prof. Chukwuma Soludo, on Thursday advised President Muhammadu Buhari to remove the controversial fuel subsidy and privatise the nation’s refineries immediately.
According to him, Buhari has the moral authority and legitimacy to quickly remove the subsidy and privatise the refineries.
“The fundamental case against subsidy removal is not economic: it is the fact that the citizens do not trust the government to optimise the use of the proceeds for their welfare. If PMB does not deal with these issues now, I wonder when, if ever,” he said.
Kachikwu told journalists in Abuja last week that the fuel scarcity across the country was largely as a result of the non-payment of the N413bn subsidy claims of the oil marketers, adding that they all stopped importing petrol because of the debt.