There are indications that the Federal Government through the Nigerian National Petroleum Company Limited, NNPC is now spending N17.72 billion daily t
There are indications that the Federal Government through the Nigerian National Petroleum Company Limited, NNPC is now spending N17.72 billion daily to fund subsidy on petrol.
Though still shrouded in secrecy, the funding strategy is consummated by way of crude sales and direct cost recovery by NNPC.
An executive of a major petroleum marketing company in Lagos told Vanguard that the N17.7 billion subsidy cost represents the difference between landing cost of imported petroleum products and effective wholesale price to petroleum marketers.
Nigeria imports all the petrol it consumes and according to the Chief Executive, Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, Farouk Ahmed, daily petrol consumption in the country is around 44.3 million litres.
At current average deport price and exchange rate, the FG through NNPC may be incurring about N531 billion losses or revenue shortfall monthly.
This has now been reflected in the monthly Federation Account Allocation Committee, FAAC, reports.
President Bola Ahmed Tinubu had on 29th May, 2023, inauguration address declared that subsidies on petrol had ended. His declaration immediately led to a hike in the pump price of fuel to N480 per litre lower limit from N185 per litre. The upper limit was around N560.
Two months later, pump price moved again to over N600 per litre with NNPC Retail dispensing at N617 per litre in Abuja while independents and major marketers sold at N627 per litre.
The upper limit in some locations hovered around N680.
The NNPC also deducts this shortfall from its remittances to the Federation Account, but the final distributable balance remains significantly higher than the pre-May 30, 2023 figures due to higher product prices.
Since then, while NNPC-owned stations and affiliates have maintained the N617 per litre rate, prices at the independents and major marketers have soared to N660-N680 per litre. In some states of the Federation the upper limit has gone up to N750.
