Without the government's subsidy, the price of gasoline in Nigeria might reach N462 per liter, as disclosed by Garba Muhammad, Group General Manager of the Group Public Affairs Division of the Nigerian National Petroleum Corporation (NNPC) Limited.
Fuel prices are kept low by the federal government, which now spends N297 per liter on the 68 million litres of gasoline consumed daily; however, if the government were to cease subsidizing PMS, fuel prices would quadruple.
Remember that the withdrawal of the subsidy was originally set for January. Still, President Muhammadu Buhari delayed it for 18 months and now plans to implement the delay in the second quarter of 2023. However, that will be up to the incoming government following the 2020 election.
In a statement released on Sunday, Muhammad made this announcement and defended the NNPC's consumption rate, which had been questioned by Customs Comptroller-General Col. Hameed Ali (ret.).
Although Ali claimed that NNPC's claims of importing 98 million liters per day were unsubstantiated by the facts and that the company actually imported only 38 million liters of PMS per day, Muhammad countered that figure by saying that 67 million liters had been imported daily from January to August of 2022.
According to the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, "The NNPC Ltd observes the average daily evacuation (Depot truck out) from January to August 2022 stands at 67million liters per day." The NMDPRA's records of daily evacuation (Depot loadouts) show daily fluctuations of as much as 100 million liters, from a low of 4 million liters. It was all laid out by him.
When asked about the price of gas and the financial challenges NNPC faces, he noted that since oil marketing firms (OMCs) stopped importing PMS in 2017, NNPC has been the country's only gasoline source. Muhammad said that oil marketing companies (OMCs) have stopped importing PMS from the third quarter of 2017 due to increased crude oil prices and PMS supply costs over the PPPRA (now NMDPRA) quota.
Despite these obstacles, NNPC has maintained its role as a supplier of last resort and is open about reporting under-recoveries in PMS costs on a regular basis.
In addition, NNPC limited reports that the average international landing cost for Q2 2022 was US$1,283/MT, with an allowed marketing and distribution cost of A46/liter. On the premise of a daily PMS supply of 60 million gallons, these costs are N6.5 trillion, or the retail pump price plus the average subsidy of N297/liter, plus sales tax. As the market and consumer preferences evolve, this will change accordingly.
The Nigerian National Petroleum Corporation (NNPC Ltd) is obligated to "continue to ensure compliance with existing governance framework that requires the participation of relevant government agencies in all PMS discharge operations," such as the Nigerian Ports Authority, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, the Nigerian Navy, the Nigeria Customs Service, NIMASA, and so on. A statement to this effect.