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Oil Nears $56, FG May Reintroduce Fuel Subsidy - Politics - Nairaland

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Oil Nears $56, FG May Reintroduce Fuel Subsidy by valentineuwakwe(m): 2:14am On Jan 11
The sustained increase in global crude oil prices has pushed up the landing cost of imported petrol closer to the current pump prices of the product in Nigeria, and appears to have triggered a return to petrol subsidy era, ’ FEMI ASU reports
Since November 13 , 2020 when the pump prices of Premium Motor Spirit ( petrol ) were last increased in the country, the price of the international oil benchmark, Brent crude, has been on an upward trajectory, rising from $41. 51 per barrel to close at $51. 22 per barrel on December 31.

Fuel marketers had in December expected another upward adjustment of PMS prices to reflect the further rise in crude oil prices .
However , a N 5 reduction in petrol price , effective December 14 , was announced by the Federal Government – a development that left them reeling in shock and questioning the deregulation of petrol price .

Crude oil price accounts for a large chunk of the final cost of petrol , and the country has continued to spend so much on petrol imports for many years amid low domestic refining capacity .

The Minister of State for Petroleum Resources, Timipre Sylva, had said in September last year that the Federal Government had stepped back in fixing the price of petrol , adding that market forces and crude oil price would determine the cost of the product .

The Federal Government removed petrol subsidy in March 2020 after reducing the pump price of the product to N 125 per litre from N145 on the back of the sharp drop in crude oil prices . The price reduction lasted till June.

Nigerians saw increases in the pump prices of petrol in four months, rising from N 121. 50–N 123. 50 per litre in June to N140 .80- N 143. 80 in July , N 148- N150 in August , N 158- N162 in September and N163 -N 170 in November.

Brent, the international oil benchmark, has risen by about 35 per cent since November 13 when the pump price of petrol was last increased. It closed at $55 .99 per barrel on Friday, its highest level in 11 months .

Going by the petrol pricing template of the Petroleum Products Pricing Regulatory Agency, the landing cost of petrol rose from an average of N 143. 60 in December to N158 .53 per litre on January 7, with the expected open market price ( retail price ) being N 181. 53 per litre.
The product is currently being sold at between N160 and N 165 per litre at many filling stations in Lagos.

The cost of petrol quoted on Platts rose to $480. 25 per metric tonne ( N 139. 67 per litre, using N 390/$ 1) last Thursday from an average of $430. 107 per MT ( N125 .09 per litre) in December . The cost of petrol averaged $391. 75 per MT ( N113 .24 per litre) in July , according to PPPRA’ s template .

Apart from the increase in global crude oil prices , the devaluation of the naira last year also led to a significant rise in the cost of imported petrol .


The PPPRA used an exchange rate of N306.90/$1 on January 14, 2020 to calculate the cost of petrol, while N387.63/$1 was used on July 31.

The naira closed at 393.50 against the dollar on Friday at the Investors’ and Exporters’ Foreign Exchange Window, and 472/$1 at the parallel market.

As of January 7, the cost of petrol plus freight stood at $500.72 per MT, translating to N145.62 per litre.

Other cost elements that make up the landing cost include lightering expenses (N4.57), insurance cost (N0.21), Nigerian Ports Authority charge (N2.38), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N1.33).

The pump price is the sum of the landing cost, wholesale margin and the distribution margins. The wholesale margin is N4.03 while the distribution margins comprise transporters allowance (N3.89), retailer (N6.19), bridging fund (N7.51), marine transport average (N0.15), and admin charge (N1.23).

The NNPC, which has been the sole importer of petrol into the country in recent years, is still being relied upon by marketers for the supply of the product despite the deregulation of the downstream petroleum sector.

Private oil marketing companies have continued to lament that their inability to access foreign exchange at the official rates has hampered efforts to resume petrol importation.

If the pump price of petrol is left unchanged amid the rise in oil prices, it means the NNPC would again bear the latest subsidy cost on behalf of the government as it did for several years before its removal last year.


There is currently subsidy, but it is being absorbed by the government through the NNPC,” the National Operation Controller, Independent Petroleum Marketers Association of Nigeria, Mr Mike Osatuyi, told our correspondent.

He recalled that he said in December that petrol pump price was moving closer to N180 per litre, adding that with the current price of crude oil, petrol subsidy would gulp about N800m daily with an average consumption level of 40 million litres.

He said, “Because of the volatility of petrol in the Nigerian political landscape, government does not have the boldness to allow full deregulation of petrol because of the spiral effects on Nigerians, and bearing in mind that Nigerians are in very hard times.”

Osatuyi said, “But the government is supposed to come out and present the subsidy to the National Assembly. They should tell Nigerians that we are going back to subsidy. But because of the loans from the IMF and World Bank that they got with the condition that petrol should be deregulated, I believe the government is trying to manage the problem.

“If we are going to do genuine deregulation, there must be a level playing field for the players. We are not where we are supposed to be; there is still some dark, hidden elements in our ‘deregulation’.

“We are practising monopolistic deregulation – where one player is on the field and it is the goalkeeper, the defender and the referee.”

The President, Petroleum Products Retail Outlets Owners Association of Nigeria, Dr Billy Gillis-Harry, stressed the need for deregulation to be properly done.

He said, “The concern I have is that we are not getting it right. We must think inwards and grow our local production capacity. I don’t know why our refineries should not work.

“Deregulation is the way to go; we want the sector to be deregulated. But we need to do it rightly. There should be a level playing field for all operators; everybody should be able to access forex at the same rate.”


While opposing the return to subsidy, he said, “We call on the government to fast-track the regulatory process to ensure that deregulation is in place.”

The PUNCH had reported on September 8, 2020 that the Federal Government’s removal of petrol subsidy and the increase in electricity tariff were in line with reforms being sought by the International Monetary Fund and the World Bank.

“The recent introduction and implementation of an automatic fuel price formula will ensure fuel subsidies, which we have eliminated, do not reemerge,” the Federal Government told the IMF in the letter of intent dated April 21, 2020 with respect to its request for emergency financial assistance of $3.4bn.

In July, Sylva said in a statement that the Federal Government had reached a conclusion that it could no longer bear the burden of petrol subsidy.

https://punchng.com/oil-nears-56-fg-may-reintroduce-fuel-subsidy/

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Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by Buharidgeneral: 4:03am On Jan 11
No functioning refinery after 6 yrs of APC administration.

Build working refinery then remove fuel subsidy. Chikena

94 Likes 7 Shares

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by Eriggs: 4:25am On Jan 11
Buharidgeneral:
No functioning refinery after 6 yrs of APC administration.

Build working refinery then remove fuel subsidy. Chikena
coming from d number supporter of d corrupt party of thieves that were in power for 16 years without building just one refinery.
I wonder how you wailers still have the mouth to talk after the evil looting you did to Nigeria.
Leave this kind of talk for genuine and good Nigerians,
Who meant well for the nation.
Government and Nigerians will take those ones more serious, not pained losers and wailers.

You are pained cos d thieves u support are no more in power to loot, not that you care for the common man on the streets.
You pdp supporters, supporters of thieves should all go and bury ur heads in shame.

snoopanddre:
Both of you are saying the truth
You are a good Nigeria.
People like you are who will need for naija to move forward.
Unbiased peeson you are,
not like other pained losers quoting me to wail.
Corrupt thieves

37 Likes 10 Shares

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by Dolapo873: 4:25am On Jan 11
Ok
Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by Oceannaagent: 4:25am On Jan 11
No comment
Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by Aboguede(m): 4:26am On Jan 11
Everybody just dey hustle grin
Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by omoyankee3(m): 4:26am On Jan 11
Instead of more revenue from increased crude oil price, It is more expenses for the govt.

12 Likes

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by easyfem(m): 4:27am On Jan 11
i wanna ask a question ooooooooooo ......... do we still have someone who believe in buari gov or one nigeria ?

75 Likes 5 Shares

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by upower123(m): 4:27am On Jan 11
Nigeria which way...one step forward.. seven steps backwards...

21 Likes

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by Kingspin(m): 4:28am On Jan 11
The most confusing government on earth.
Keep increasing and increasing without any backup policy to alleviate the hardship that fellow.

Bunch of clowns without any atom of 1plus 1 in them.
The economic circle of this government is zero.
They will end up not improving anything after 8 years. The signs are there.

16 Likes 3 Shares

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by ipobarethieves: 4:28am On Jan 11
sad
Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by ecolime(m): 4:28am On Jan 11
Cost of fuel will be increased again

6 Likes

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by Racoon(m): 4:28am On Jan 11
cheesy I laugh in my mother tongue! I thought after all the lies of excess revenue generation by all manner of govt agencies & end of the fraudulent subsidy/subsidy under-recovery, all these should be a thing of the past? Wetin happen again nah?

24 Likes 3 Shares

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by dalongjnr: 4:28am On Jan 11
That's very bad. Government can't be speaking from both side of the cheek.
why reintroduced what's already been removed? why feed the already overfeed oil marketers?

13 Likes 1 Share

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by Nobody: 4:30am On Jan 11
upower123:
Nigeria which way...one step forward.. seven steps backwards...
grin grin grin grin grin grin grin grin grin grin grin grin grin
Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by Nobody: 4:30am On Jan 11
dalongjnr:
That's very bad. Government can't be speaking from both side of the cheek.
why reintroduced what's already been removed? why feed the already overfeed oil marketers?
grin grin grin grin grin cheesy grin grin cheesy cheesy grin
Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by owiko(m): 4:31am On Jan 11
The government of the day sef, very anyhow

2 Likes

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by Racoon(m): 4:32am On Jan 11
Even them Mannabbqgrills them saw this one & also jump pass because it is not easy defending it.

37 Likes 4 Shares

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by martolux(m): 4:32am On Jan 11
You don't mean well for the nation.
Eriggs:
coming from d number supporter of d corrupt party of thieves that were in power for 16 years without building just one refinery.
I wonder how you wailers still have the mouth to talk after the evil looting you did to Nigeria.
Leave this kind of talk for genuine and good Nigerians,
Who meant well for the nation.
You are pained cos d thieves u support are no more in power to loot, not that you care for the common man on the streets.
You pdp supporters, supporters of thieves should all go and bury ur heads in shame

65 Likes 8 Shares

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by jayworld15(m): 4:33am On Jan 11
They shouldn’t try it. They mustn’t try it. They MannaBBQgrinn’t try it. They simplyleon’t try it. They zombien’t try it. Nigerians will not take it likely with them and their zombies. Shior

6 Likes 1 Share

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by splashbaby(m): 4:33am On Jan 11
Crazy idiots in government. They banned rice importation because we can grow them...close all the boarders and gave wavers to their brother.

The same crude oil that we have in surplus these bastrdss are using to oppress us all...they turned around and starts importing petroleum products because they destroyed our refineries.

Gave subsidies to their friends to import petroleum products, and in turn pass the burden on to the people in form of subsidies.

If price hike can happen again, our leaders are all bunch of crooks.

17 Likes 6 Shares

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by holluwizzy(m): 4:34am On Jan 11
Very soon, they will say we should be paying for the following

Bloods thats flow in our vein.

Air we breath

Eating with our money will be subsidized.

To hustle self .

To travel out is a crime.

6 Likes 1 Share

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by PHijo(m): 4:35am On Jan 11
We would like to hear from the petroleum minister and not the junior minster.

The petroleum minister's response is what we can possibly take serious.

6 Likes

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by Ferizu: 4:37am On Jan 11
Lalalalala land
Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by OrdinaryNigeria(m): 4:39am On Jan 11
Eriggs:
coming from d number supporter of d corrupt party of thieves that were in power for 16 years without building just one refinery.
I wonder how you wailers still have the mouth to talk after the evil looting you did to Nigeria.
Leave this kind of talk for genuine and good Nigerians,
Who meant well for the nation.
You are pained cos d thieves u support are no more in power to loot, not that you care for the common man on the streets.
You pdp supporters, supporters of thieves should all go and bury ur heads in shame
I think your brain is on lockdown.
U think, wen u talk like this, u get people scared not to talk the truth.
If PDP failed, so Apc is also planning to fail?
APC came to move the nation forward not excuse.
4 years of pdp you started using GSM. Wat has this gov given except using de gsm for kidnapping?
No insult intended

64 Likes 10 Shares

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by valuedammy(m): 4:41am On Jan 11
Which kain Country be ds now, why are these Leaders so wicked.

If I may ask, is it only Nigeria that feel the effect of increase in price of crude oil in the international market which in turn affect the local price of the product. Is this how other Countries without Refinnery also increase the price of the product.

If a Country that has the product in abundance and only export it for refining is being affected greatly by the global price what will now happen to a Country that doesnt have the product at all let alone of having a Refinery.

Devil is really a Learner where we have Nigerian Leaders.

Why is God so Happy watching our Leaders treat us like this?

12 Likes 1 Share

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by ichidodo(m): 4:46am On Jan 11
we are trading it..
Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by meobizy(f): 4:48am On Jan 11
They should do whatever they want. It doesn't concern me. So far I'm employed I can afford fuel even if it's 13,000 naira per litre.
Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by bay8267: 4:50am On Jan 11
what are those refinary we have are doing

1 Like

Re: Oil Nears $56, FG May Reintroduce Fuel Subsidy by GeneralPula: 4:52am On Jan 11
meobizy:
They should do whatever they want. It doesn't concern me. So far I'm employed I can afford fuel even if it's 13,000 naira per litre.

Dang!!

This is how I reason too. I don’t usually bothered cuz government doesn’t care..

They’ve never cared !

2 Likes

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