Nigeria’s subsidy payment is now at N10 billion daily, as international oil price continues to surge. The current international oil price means it will cost almost double the amount to import petrol when compared to the same period last year.
The astronomical rise in the oil price is driven by the growing concern of supply disruption which reached fever pitch in Europe, no thanks to the conflict between Russia and Ukraine.
With sanctions flying around Russia, European countries are not really concerned that one of the world’s oil giants will turn off its tap.
The rise in oil price could mean the fuel scarcity won’t go away anytime soon.
The Nigerian National Petroleum Corporation (NNPC) relies heavily on imports to meet the daily demands of over 60 million litres in the country.
Nigeria’s Brent, the oil benchmark for Nigeria’s oil, closed the week at $118.1; this is the highest level in the last nine years and should have been a piece of good news.
But, this development means Nigeria’s landing cost of petrol is now above N333 at an official rate of $416.46 and 1,341 litres per metric tonnes.
The Nigeria National Petroleum Corporation (NNPC) claims Nigeria’s daily petrol consumption is at 60 million litres meaning to keep the price at 165 per liter, NNPC will be covering a cost of more than N168.
The N168 means Nigeria’s daily subsidy amounts to over N10 billion as the pump price of the product remains steady at N162-N165 per litre.
According to a documents, the cost of petrol quoted on Platts stood at $918.75 per metric tonne (N285.33 per litre, using the I&E rate of N416.33/$1) as at February 25 2022 from $754.75 per MT on December 31, 2021.
Other costs include freight at $26.77 per MT (N8.31 per litre), lightering expenses (N4.81), and Nigerian Ports Authority charge (N2.49).
Others are Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N2.17).
Wholesaler margin is at (N4.03), admin charge (N1.23), transporters allowance (N3.89), bridging fund (N7.51), marine transport average (N0.15), and retailer margin (N6.19).
According to the most recent data from the Nigerian Midstream & Downstream Petroleum Regulatory Authority (NMDPRA) Nigeria had in its stocks as at November 29, 2021, 2.12 billion litres of PMS that could take 37.97 days to exhaust.
While the data is yet to be updated, 37 days from November 29, 2021, ended on January 6, 2022.
This explains why the NNPC was unable to remit a kobo to the federation account in January, as it was compelled to pay a high subsidy for petrol imported into the country which averaged $90 per barrel for the month.
