The Federal Government’s daily spending on petrol subsidy
may have risen to N2.06bn as the pricing template for the
product by the Petroleum Products Pricing Regulatory Agency
on Sunday put the subsidy at N51.61 per litre, the highest
level this year.
The landing cost of Premium Motor Spirit, otherwise known
as petrol, was put at N123.12 per litre as of Thursday, June
11, up from N119.66 per litre on June 2, while the Expected
Open Market Price was N138.61 per litre.
Based on daily petrol consumption of 40 million litres, a
figure supplied by the Pipelines and Products Marketing
Company, the total subsidy cost on the product as of June 11
would amount to N2.06bn at N51.61 per litre, up from N48.15
on June 2.
Subsidy refers to the money paid, usually by the government,
to keep prices below what they will otherwise be in a free
market system.
Nigeria, which relies on importation for most of its fuel needs
as the country’s refineries are in a poor state, has seen a drop
in importation of refined petroleum products in recent
months, leading to acute scarcity of the products across the
country.
The global benchmark Brent crude lost almost half of its
value between June 2014 and January this year, plunging
below $50 per barrel, but has rebounded in recent months. It
traded between $63 and $65 last week.
The landing cost of petrol was put at N75.15 per litre on
January 23, with a subsidy of N3.64 per litre, almost a week
after the Federal Government reduced the pump price of the
product by N10 per litre.
The landing cost is the cost of the product plus freight rate at
N107.66; trader’s margin, N1.47; lightering expenses, N4.19;
Nigerian Ports Authority fees, N0.77; financing cost, N1.68;
jetty depot throughput charge, N0.8; and storage charge, N3.
The addition of the distribution margins to the landing cost
gives the Expected Open Market Price (total cost). The
distribution margins, which comprise retailers, transporters
and dealers’ profits as well as bridging fund, marine transport
average and admin charges, were not stated.
Retailers get N4.6; transporters, N2.99; dealers, N1.75;
bridging cost is N5.85; marine transport average, N0.15; and
the admin charge, N0.15. The sub-total margin stands at
N15.49.
When added to the landing cost of N123.12, the EOMP of
N138.61 per litre is arrived at. But this is subsidised and a flat
official rate of N87 per litre is given.
The Federal Government had on January 18, 2015 announced
the reduction in the pump price of petrol from N97 to N87
per litre, attributing this to the decline in global crude oil
prices.
There have been calls in many quarters on the government to
fully deregulate the downstream sector of the oil and gas
industry to encourage private investments in crude oil
refining, as well as the privatisation of the nation’s existing
refineries, which are working far below their installed
capacities.
Source:www.punchng.com/business/business-economy/daily-subsidy-on-petrol-hits-n2bn/?utm_source=twitterfeed&utm_medium=twitter

[size=14pt]The Daura President
claimed there was no Subsidy[/size]

gregg2:
[size=14pt]The Daura President claimed there was no Subsidy[/size]

and u aren't a kid o.

We really need our refineries functioning so as to save cost..it'll b a huge financial relief on the govt..

olasmith10:
We really need our refineries functioning so as to save cost..it'll b a huge financial relief on the govt..

Relief on govt and the masses too.