FG’s Subsidy On Fuel Hits N29.68bn In 14 Days

The fuel crisis rocking the country has helped to push subsidy being paid by the Federal Government on the Premium Motor Spirit (PMS) also known as petrol to an all-time high of N2.1164 billion daily, checks by New Telegraph have revealed. A document of the Nigerian National Petroleum Corporation (NNPC) submitted to President Muhammadu Buhari, a copy of which was sighted by this newspaper yesterday, hinted further that this new subsidy mark has been incurred “in the last 14 days,” amounting to N29.68 billion subsidy.

While the crisis has surged daily truck out of petrol to 52 million litres from an average of 40 million litres daily average consumption, according to the document, about N40.70 extra cost is incurred on each litre to ensure that they are sold at N145 per litre modulated price.

“The national truck out capacity had, in the last two weeks, been jerked up to an average of 1,500 trucks, translating to 52 million litres per day, which is much higher than the normal consumption of 850 trucks per day across the various depots in the country,” the document showed.

Though the NNPC insisted that this new cost would not lead to hike in pump price of fuel, it confirmed the surge in daily truck out and extra cost through the Group Managing Director of the NNPC, Dr. Maikanti Baru, saying that it now cost N171.40 per litre to import petrol into the country. Using the approved template of the Petroleum Products Pricing Regulatory Agency (PPPRA), the total landing cost amounts to N185.70 with the addition of the N14.30 per litre distribution margin approved in the last pricing template for petrol by the PPPRA.

This implies that the government is subsidising petrol consumption by as much as N40.70 per litre and N2.1164 billion on 52 million litres truck out daily in the last 14 days. On the volume of products available for supply, the NNPC GMD informed that 13 vessels laden with over 650 million litres of products were currently discharging their contents at the sea port while additional vessels have been lined up to berth in early January 2018. He said 814 million litres of petrol were currently being injected into the system to guarantee nationwide elimination of fuel queues before the end of the year.

He also talked about the cost of importing petrol into the country and the seeming pressure by marketers on the government to hike the price, in accordance with market forces. Baru explained that as of Friday last week, the landing cost for a litre of petrol was N171.40, but the Federal Government has no plan of increasing the cost at the pumps. In this regard, Baru said: “The landing cost comprising CIF (cost, insurance and freight) of petrol as of last Friday was in the neighbourhood of $620 per metric tonne, so with the official exchange rate of N305 to the dollar, the landing cost should be N171.40 per litre.” In the mid-2015, the Nigerian Extractive Transparency Initiative (NEITI) released its audit report indicating that the Federal Government spent about N4.5 trillion between 2006 and 2012, a period of seven years, as subsidy on petroleum products imported into the country. With the N2 billion subsidy being paid daily in the last two weeks, the government is paying higher than it was previously paid.

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