Fuel subsidy hits N1.7bn/pd, as oil price hovers at $63.1/pb


There are indications that despite the implementation of the no subsidy policy by the Federal Government, subsidy obligations of the government may have started mounting with last week’s closing daily figure at about N1.7 billion, or N12 billion during the week.

This follows the huge leap in the international oil price, the benchmark for local petrol price determination. The crude prices closed last week at about $63.14 per barrel in the global market.

On February 5, 2021, when the oil price was nearing $60 per barrel, the expected open market price of petrol rose from N160 to N190 per litre, based on the petrol pricing template of the Petroleum Products Pricing Regulatory Agency, PPPRA.

Since then, the PPPRA, which listed some items, including Administrative charges and Retailers margin at N1.23, and N6.19 respectively, has not released a comprehensive template, capable of guiding stakeholders in the sector.

But a visit to the private depots in Lagos, and its environs, weekend, showed that the landing cost of the product stood at N180 per litre, meaning that the pump price would certainly be in excess of N192 per litre.

However, the product is currently being sold at N162 at many filling stations in Lagos, Abuja, and other cities, although some Independent marketers in the outskirts sold at higher prices across the country.

Based on an expected open market price of N192 per litre of petrol and an average current pump price of N162 per litre, the nation’s petrol subsidy hovers at about N30 per litre.

Nevertheless, with a daily petrol consumption of about 57 million litres, and a subsidy of N30 per litre, the subsidy currently hovers at N1.7 billion daily, and N12 billion weekly.