• Sunday, April 14, 2024
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Petrol subsidy crashes on stronger naira

Petrol subsidy crashes on stronger naira

The Nigerian government is breathing a sigh of relief as the long-awaited strengthening of the naira against the US dollar has significantly reduced the burden of petrol subsidies which estimates suggest could be as high as N17.72 billion daily.

An exclusive petroleum pricing template seen by BusinessDay showed the latest cost of bringing a litre of petrol to Nigeria’s shores, which includes the cost of the product, freight, insurance, govt charges, and storage, stood at N902, using an exchange rate of N1,280/$.

Read also: Oil hits $90, piles more pressure on Nigeria’s subsidy bill

Once the petrol arrives in Lagos, the price increases to N917 due to additional costs such as Nigerian Ports Authority (N5.63), pipeline charge (N0.80), Nigerian Midstream and Downstream Petroleum Regulatory Authority admin fee (N3.03), Midstream and Downstream Gas Infrastructure Fund (N3.03), storage charge (N3), and Nigerian Midstream and Downstream Petroleum Regulatory Authority (N3.03).

With the import cost of petrol decreasing, the government can potentially reduce or even eliminate the subsidy altogether.

This could free up significant budgetary resources for investment in critical areas like infrastructure, education, and healthcare.

 

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