Published On: Tue, Jun 19th, 2018

Fuel subsidy has risen to N2.4 billion daily

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As a result of the high price of crude oil in the international market,Nigeria has been losing the gains of increases in the international oil prices as the Federal Government subsidy on fuel has risen to N2.4 billion daily in May, from N774 million in March, 2018

 

In a report obtained by Vanguard, the Petroleum Products Pricing Regulatory Agency, PPPRA, stated that without the government subsidy, the price of petrol could have been as high as N205 per litre in the domestic market.

 

According to PPPRA, the price of the commodity appreciated by 8.47 per cent from N189 per litre recorded in April 25, 2018 to N205 per litre as at May 16, 2018.

 

However, the price of fuel pump in March this year hovered $66 per barrel. it had hovered between $75 and $80 per barrel since last month, thus pushing up landing cost of the refined product in the domestic markets for finished product importers like Nigeria.

 

The PPPRA  stated that between May 11 and May 16, 2018, oil prices continued to soar during the week reference, stating that the average price for Brent Dated was $77.92 per barrel; Nigeria’s Bonny Light was $78.08 while West Texas Intermediate, WTI, was $60.27 per barrel.

 

Price of petrol is still fixed at a maximum of N145 per litre, meaning that the NNPC is currently paying N60 as under recovery for a litre of the commodity.

 

The Group General Manager, Group Public Affairs Division of the NNPC, Mr. Ndu Ughamadu said: “The explanation is simple. The higher the price of crude oil the higher the price of petroleum products in the international market. It should also be noted that this has also impacted on the landing cost, and by extension our under recovery.”

 

Vanguard reported that in Ogun state and other border communities, the situation has worsened by smuggling, as NNPC is now forced to subsidize the product for neighboring countries.

 

In a related findings  from the Group Managing Director of the NNPC, Dr Maikanti Baru who led top management team of the corporation to visit Comptroller-General of Nigeria Customs Service, Col. Hameed Ali (retd), recently, had blamed the increase in fuel consumption on massive smuggling of petroleum products to neighbouring countries.

 

Baru further stress on the proliferation of fuel stations in communities with international land and coastal borders across the country, insisting that the development had energized unprecedented cross-border smuggling of petrol to neighbouring countries, making it difficult to sanitise the fuel supply and distribution matrix in the country.

 

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