…N120bn Subsidy Unsustainable
The Group General Manager, Nigerian National Petroleum Corporation (NNPC), Mr Mele Kyari, has said the Federal Government subsidises Premium Motor Spirit with about N120bn ($263.25m) monthly.
According to him, while the actual cost of importation and handling charges amounts to N234 per litre the government had been selling at N162 per litre therefore bearing the difference. He said the NNPC could no longer afford to bear the cost, saying Nigerians would have to pay the actual cost sooner or later.
He argued that market forces must be allowed to determine the pump price of petrol in Nigeria. Although he claimed the nation was not in a subsidy regime, he said the government was trying to exit what he described as ‘under-price sale of PMS.’
He said, “Today, NNPC is the sole importer of PMS. We are importing at market price and we are selling at N162 per litre today. Looking at the current market situation today, the actual price could have been anywhere between N211 and around N234 per litre. The meaning of this is that consumers are not paying for the full value of the PMS that we are consuming and therefore, someone is bearing that cost.
As we speak today, I will not say we are in subsidy regime, but we are in a situation where we are trying to exit this under-price sale of PMS until we come to terms with the full value of the product in the market. PMS sells across our borders anywhere around N300 per litre and in some places up to N500 to N550 per litre.
“Our current consumption is evacuation from the depots about 60 million litres per day; we are selling at N162 to the litre, and the current market price is around N234, actual market price today.
“So, the difference between the two, multiplied by 60 million x 30 will give you per month. I don’t have the numbers now. This is a simple arithmetic that we can do but if you want exact from our books, I do not have it at this moment, but it is somewhere between N100bn and N120bn per month. I don’t have the exact number.”
“Although, we have this agreement with Niger, but they have constraint on how to deliver on it to this country because of the contract they have with the Chinese. So, if we realise that they have constraints we can change. The whole idea is that Niger has 20,000 bpd, which is even bigger than their consumption.
“There is already illegal trading going on between Nigeria and Niger. So, what we want to do is to see how we can legalise it “We want to begin to create business with our neighbours. This is what ECOWAS and AU are trying to encourage. That is inter-regional trade and begin to trade among ourselves.”