By importing 5.61 billion litres of Premium Motor Spirit, popularly known as petrol, into Nigeria in the second quarter of this year, the Nigerian National Petroleum Corporation must have spent about N308.6bn as subsidy on the commodity. Latest figures from the National Bureau of Statistics showed that the volume of the PMS imported into Nigeria rose by 15.2 per cent in the second quarter of this year to 5.61 billion litres.
Since 2017, the NNPC has been the sole importer of petrol, as other oil marketers have stopped importing the commodity due to the high landing cost of the product when compared to its N145 per litre approved pump price at filling stations. Oil marketers told our correspondent that the landing cost of petrol in Q2 2019 was between N170 and N200 per litre, as they explained that the fluctuation was due to the changes in global crude oil prices.
For instance, in May this year, the Executive Secretary, Depot and Petroleum Products Marketers Association of Nigeria, Olufemi Adewole, stated that most marketers were not importing the PMS because it was impossible to make profit, considering the price at filling stations. “If the margins cannot cover my cost vis-à-vis landing cost of the product, that means it is not profitable. For instance, as of May 11, 2019 or around that time, the landing cost of the PMS was over N200 per litre. Now, are you telling me to bring in a product which sells above N200 and you want me to sell at N145?” he asked our correspondent. Therefore, at about N200 per litre landing cost and N145 per litre approved filling station price, it means that the NNPC would have been subsidising every litre of the commodity by about N55.
This implies that for the 5.61 billion litres that was imported in the second quarter of this year by the corporation, it would have spent about N308.6bn as subsidy on petrol. On July 26, 2019, The PUNCH exclusively reported that within two months, the amount spent by the NNPC in subsidising petrol rose by over 1,174 per cent. The report specifically stated that the corporation spent a total of N206.59bn on subsidy in January and February 2019, in contrast to N16.21bn that was spent for the same purpose in November and December last year.
The NNPC, however, classifies its subsidy spending as under-recovery, as it had repeatedly argued that only the National Assembly could approve subsidy. Under-recovery is the additional cost that the NNPC is incurring in subsidising the price of petrol in order to ensure that it is sold at the regulated price of N145 per litre, even when the real market price is above this regulated rate. In another development, the corporation announced on Thursday that it was working out modalities to partner the Nigerian Society of Chemical Engineers to build condensate refineries. It said this was part of efforts to make Nigeria a net exporter of refined petroleum products. The Group Managing Director, NNPC, Mele Kyari, disclosed this when he received the national executives of the Nigerian Society of Chemical Engineers led by its President, Onochie Anyaoku, at the Abuja headquarters of the corporation.
“We will keep the flag flying and take the NNPC to the next level by delivering value to the Nigerian people. The NNPC is willing and ready to work with the NSChE to ensure that the corporation remains a going concern. We look forward to every support that we can get from you,” Kyari stated. Punch