The Nigerian National Petroleum Corporation (NNPC) has revealed that smuggling of Premium Motor Spirit (PMS), also known as petrol, across Nigeria’s borders has pushed daily consumption of petrol to 103 million litres, leading to a monthly petrol subsidy of N150 billion.
According to reports from a stakeholders meeting organised by NNPC to discuss how best to stop smuggling in the country, the Corporation’s Group Managing Director (GMD), Mele Kyari, said the current situation had continued to bleed the country as it could not sustain the payment of subsidy that accompanies the volume.
Kyari explained how latest reports from Petroleum Products Pricing Regulatory Agency (PPPRA) of the trucks sent out showed there has been some level of collapse of load-out, with average move from 70 million litres to 60 million litres just in one month, meaning that the country can do with less than 70 million litres per day.
“In very recent data, we see what we really want in the beginning of May and June. There was a day we loaded out about 103 million litres of PMS within one day across the depots. We know it is not required, we know it is inappropriate and we also know that something wrong is happening,” Kyari said.
Commenting on the current PMS and subsidy payment, Kyari explained that with the current exchange rate, the pump price of petrol should be N256 per litre.
“If we are to sell at the market today at the current exchange rate, we will be selling the product at about N256 to a litre. What we sell today is N162, so the difference is at a cost to the nation,’’ he said.
“The difference comes back to as much as N140 billion to N150 billion cost to the country monthly.”
For most experts, the latest revelation from NNPC is not a surprise as analysis from BusinessDay showed Africa’s biggest oil-producing country may pay more than half a trillion naira subsidising the cost of petrol within the first six months in 2021 if oil price remained below $75.
Data gleaned from the Nigerian National Petroleum Corporation (NNPC) showed Nigeria’s petrol subsidy soared by 397 percent over a four-month period, from a monthly cost of N25.37 billion in January 2021 to N126.30 billion in April.
A further breakdown shows the state-owned corporation spent N25.37 billion on petrol subsidy in January, which increased by 196 percent to N75.13 billion in February.
In March, the petrol subsidy bill increased by 49 percent to N111.97 billion, thereafter increased by 12 percent to N126.30 billion in April 2021.
Experts say the implication of Nigeria’s reckless fuel subsidies means the country prioritises cheap petrol over education, health, defence, agricultural and rural development that would have increased the economic growth or standard of living of its over 200 million people.
