. Paid N6.210trn to oil marketers in 8 years
For not allowing premium motor spirit (PMS), popularly called petrol to be sold at N448.20 per litre, the Federal Government says it spends about N18.4 billion daily on subsidy payments in 2023.
The sum is based on a daily consumption of 65 million litres at N283/ litre of petrol, being the difference between the landing cost of the product and the retail price of N165.
This is even as the government said it paid a total of N6.210 trillion in eight years to independent oil marketers as petrol subsidy by the Nigerian National Petroleum Company (NNPC) between 2013 and 2021.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, disclosed this yesterday during the House of Representatives’ Ad Hoc Committee, probing the Petroleum Products Subsidy Regime from 2013 to 2022.
The Minister, who was grilled over funding of subsidy payments, said: “I am going to address issues as highlighted by the lawmakers in the letters sent to us. Deduction of PMS under recovery shortfall by NNPC for the period 2013 to 2022, we are reporting that there is a total sum of N4.436 trillion, which was deducted as PMS under recovery by NNPC for the period January 2013 to December 2021.
So, the PMS subsidy we are carrying today in the nation is around N283 per litre; that is what we are carrying. So, it is the difference between the pump price and the landing cost of petroleum products in the country.
“For 2023, the projection is that the average daily truck-out will be N64.96 million per day; that is about 65 million per day, using an average rate at open market rate of N448.20 and then a regulator pump price of N165 per litre. This gives us an average under-recovery, that is the difference between N165 and N448, of N283.2,” she said.
“So, just multiply the amount of litre per day, the open market exchange rate of naira to the dollar, and then the gap between the pump price and open market price, the total amount of subsidy per day is N18.397 billion.
“So, if you are projecting for the full year, from January to December, it will be N6.715 trillion. If you are projecting for half a year, it will be 50% of that N3.375 trillion. I said earlier in the recommendations that we sent to parliament for consideration on MTEF is half-year that will be N3.357 trillion.
“Fuel subsidy is the difference between the pump price which is now fixed at N165 (per litre) and the landing cost which we are projecting at an average of N448.20 per litre in 2023. Even now, the cost is around that.
“So, the PMS subsidy we are carrying today in the nation is around N283 per litre; that is what we are carrying. So, it is the difference between the pump price and the landing cost of petroleum products in the country.”
The minister, who reiterated that fuel subsidy is not sustainable as it is exacting pressure on the finances of the country, expressed the hope that the subsidy regime will come to an end soon.
