As it has become clear the Nigerian government has continued to subsidise the price of petrol, a PREMIUM TIMES analysis has shown the nation may be expending a whopping N102.5 billion monthly to reduce the retail cost of petrol.

The sum is higher than the N70 billion the government budgeted for the provision of Universal Basic Education (UBEC) in the 2021 budget, as well as the N45.19 billion allocated for immunization.

This is according to a PREMIUM TIMES’ analysis of the revelations thrown up by the controversial price template released by the Petroleum Products Pricing Regulatory Agency (PPPRA) last week.

PREMIUM TIMES reported how the agency came under attacks last Thursday when it released a template indicating a huge jump in the retail price of petrol from about N160 to N212.

The decision contradicted earlier assurances by the NNPC that there will be no increment in March, prompting the government to disown it and apologise.

In a statement Friday by its executive secretary, Abdulkadir Saidu, the PPPRA said it does not “fix or announce prices”, and claimed the petroleum pricing template published on its website was not intended to cause an increase in the price of petrol.

However, previous templates released by the agency formed the basis of fuel price increase or decrease in the country.

Prior to latest controversial announcement, the PPPRA published its last template in November 2020.

In his reaction, the Minister of States for Petroleum, Timipre Sylva, also disowned the increment.

Mr Sylva said neither he nor President Muhammadu Buhari had approved the decision to increase the retail price to N212 per litre.

The NNPC also insisted its position had not changed and the PPPRA later deleted the post from its website.

New Revelation

Aside the controversies it generated, the new template released by the PPPRA also revealed details of the subsidy the Nigerian government effectively incurs.

In its pricing guide for March, the PPPRA put the wholesale margin at N4.03 per litre, administration charge at N1.23 per litre, transporters’ allowance (NTA) at N3.89 per litre, Bridging Fund cost at N7.51 per litre, and Marine transport average (MTA) at N0.15 per litre.

The agency said the expected ex-depot price for wholesale products marketers would be N206.42 per litre.

Further review of the pricing template showed the average price per ton of the commodity was put at $561.96, or N169.22 per litre, while the average freight rate coat (North-West Europe to West Africa) is $21.63 per ton, or N6.51 per litre.

With a retailers’ margin of N6.19, the new guide showed that the expected retail price would be N209.61 on the lower band and N212.61 on the upper band.

PREMIUM TIMES’ analysis showed that the difference between the N206.42/litre ex-depot price announced by the PPPRA and the N148/litre price petrol is sold to marketers by NNPC reveals a subsidy of N57.82/litre.

The amount of petrol Nigerians consume daily has been a subject of conjectures in recent years, as figures released by different agencies often conflict.

The NNPC in its operational report said Nigeria consumes about 57.4 million litres of petrol daily.

In February, the Department of Petroleum Resources, DPR, put national demand for petrol, also known as petrol, at 38.2 millionlitres daily.

Last year, the nation’s statistics bureau said Nigerians consumed 20.8billion litres of petrol in 2019, which comes to about 57.2million litres every day. NBS cited data provided by the Petroleum Products Pricing Regulatory Agency, which it said it verified.

However, PREMIUM TIMES adopted the NBS’ conservative figure of 57.2 million litres, spread across a 31-day period. This newspaper found that the government through the NNPC will be spending about N102.5bn as petrol subsidy monthly.

For years, the government denied it paid subsidy on petrol, yet it did so through the NNPC, which described the cost as “under recovery”.

Meanwhile, the cost is subject to the dynamics in the international oil market. It means that should there be an increase in the price of oil, as being projected by analysts, the subsidy cost is also bound to increase, just as a slump would also lead to reduction in subsidy cost.


Subsidy

In March 2020, amid a global oil price crash, Nigeria cut its pump price and said it had eliminated subsidies.

The government also announced a new price cap that maintained government control, but said it would allow prices to move with the market.

Nigeria’s petrol prices had been kept artificially low at N145, with subsidy eating into a huge chunk of government revenues.

But by June 2020, the NNPC recorded a N5.34 billion ($14 million) cost for fuel, raising suspicion that subsidy had not returned to the government’s books.

Until recently, the government has not come out clean on how much it injects into subsidy payment, even as the item is not contained in recent budgets.

Some Nigerians have called for the removal of subsidy, in order to enable the government invest the fund into other developmental projects. Others have however condemned calls for its removal, citing it as perhaps one of the most significant “benefits” the masses enjoy from the government. Those in the later category, such as the organised labour, have advised the government to fix the refineries before removing fuel subsidy.

Many have also expressed worry over the government’s sincerity, and wondered whether the government would indeed commit funds generated from subsidy removal into actual developmental projects.

Nigerians typically use petrol to power their vehicles, tricycles, and motorcycles, and in a country with poor electricity supply, other Nigerians in their millions power their generators with petrol.

A study supported by the British government estimated that Nigeria spent N10 trillion on subsidies from 2006 to 2018, more than the budgets for health, education or defence.

The pricing template released by PPPRA effectively shows the government has been paying fuel subsidy despite its denials

"..Nigeria’s former  Minister of Petroleum Resources, Ibe Kachikwu,has admitted the failure of President Buhari’s administration to give Nigerians refinery as promised in the run-up to the 2015 presidential election...
http://saharareporters.com/2019/06/08/buharis-administration-failed-nigerians-not-building-refinery-promised-kachikwu

Racoon:

"A single lie destroys a reputation built over many years." For a budding political party like the then emerging APC, they could have played opposition with caution and wisdom but not in our side of the world.

They condemned the subsidy which was of course a major source of economic wastage without any iota of rational thinking even denouncing it as a complete fraud.Just as the case with the BH insurgency, anti-corruption fight among many other things.

Fast forward to 5 years later, they are not only secretly paying(cum looting) same, but made it an official policy of government to brazenly lie to Nigerians about same.
Unanswered questions remains:
-1).Who approved the subsidy or alleged subsidy under-recovery funds the NNPC have been paying?
-2).Why is the price of petrol and other petroleum products still high despite these payments with occasional unavailability of these products.
-3).Why have the Buhari-led government been lying to Nigerians thereby insulting the sensibility of a nation they are governing?

Standing5:
These questions aren't necessary. Changing crude price means changing subsidy. What I cannot comprehend is why govt cannot declare a state of emergency on the four underperforming refineries under them or build a new one that will be profitable.

For years, the government denied it paid subsidy on petrol, yet it did so through the NNPC, which described the cost as “under recovery”.
Meanwhile, the cost is subject to the dynamics in the international oil market. It means that should there be an increase in the price of oil, as being projected by analysts, the subsidy cost is also bound to increase, just as a slump would also lead to reduction in subsidy cost.

Racoon:
This is how we always get it wrong.Subsidy payment is a function of the FG as the regulation of petroleum products and pricing by the NNPC & PPPRC respectively is an exclusive right of the FG despite the denial.

The government owes the nation an explanation on any change in policy regardless of changes in the global price of crude oil because there must be probity and then accountability without which the endless corruption in the NNPC with go on unabated.

Standing5:
In 36 months that can effectively build a refinery like the mega one in Lekki and correct a lot of economic errors in Nigeria.
No leader wants to do the reasonable thing(GEJ inclusive).

Islie:
The pricing template released by PPPRA effectively shows the government has been paying fuel subsidy despite its denials.



https://www.premiumtimesng.com/news/headlines/449936-nigeria-to-spend-n103-billion-monthly-on-petrol-subsidy.html

Islie:
The pricing template released by PPPRA effectively shows the government has been paying fuel subsidy despite its denials.



https://www.premiumtimesng.com/news/headlines/449936-nigeria-to-spend-n103-billion-monthly-on-petrol-subsidy.html

Racoon:
This is how we always get it wrong.Subsidy payment is a function of the FG as the regulation of petroleum products and pricing by the NNPC & PPPRC respectively is an exclusive right of the FG despite the denial.

The government owes the nation an explanation on any change in policy regardless of changes in the global price of crude oil because there must be probity and then accountability without which the endless corruption in the NNPC with go on unabated.

pretydiva:
But I thought no more subsidy on petrol Why is this govt confused?