- Under the administration of President Muhammdu Buhari, the payment for fuel subsidy has increased astronomically
- However, a report has shown that the increase has not in any way helped bring down the cost of transportation in the country
- This is raising questions on why the subsidy payment and who are the beneficiaries amid the resolve by FG to continue payment
SBM Intelligence, a geopolitical research firm, says despite petrol subsidy payments, transport costs and petrol prices increased by a whopping 890 percent from 2017 to 2021(five years).
SBM said this in a new report by the research firm titled ‘Growing Fuel Subsidy and Transport Costs: Which Way Forward, Nigeria?’
It said over five years, petrol prices increased by 12.1%, petrol subsidy by 890% and transport cost by 283%.
Nigeria's foreign reserves will deplete further in 2022, despite rising oil prices, financial analysts say
Payment of subsidy cannot be justified
Do you have a groundbreaking story you would like us to publish? Please reach us through firstname.lastname@example.org!
SBM believes the federal government cannot make justification for the rising fuel subsidies due to rising transportation costs.
"The payment of petrol subsidies has ensured that Nigeria has the lowest price for petrol in the West African region and the third lowest price for petrol in Africa."
"But the data shows that while petrol costs in Nigeria have actually reduced in dollar terms in the last five years, transport costs have more than doubled. While the continued payment of subsidies may be politically expedient, economically, it is not justifiable."
Breakdown of rising fuel subsidy
SMB stressed that in a bid to keep fuel prices down, the federal government continues to cater for petrol subsidies which have continued to rise over the years, the Cable reports
The report continues:
“To retain the pump fuel price at N145 in 2017, the NNPC had said that it spent N144.53 billion in subsidising petrol, whereas transport cost ranged from N122 to N138, an obvious rise. In fact, fuel price decreased by $0.06,”
It noted further that between 2017 and 2018, the cost of fuel subsidy had increased by a whopping 405% yet fuel price remained constant all through.
By 2019, the cost reduced by 25%, but the decrease is insignificant in comparison with the initial 405% increase.
Furthermore, it noted that 2020 saw an alarming spike as the government incurred N1.192 trillion on subsidy, more than double the cost for 2019.
By 2021, subsidy had gulped N1.43 trillion, a stunning rise of 890%, over the five years, Nairametrics also reported quoting SBM.
MRS Fingers NNPC, Duke Oil over bad fuel in circulation
Meanwhile in an earlier report, Legit.ng revealed that the management of MRS Oil Nigeria Plc has cleared the air on how the Nigeria Petroleum Corporation brought bad fuel into the country which is causing scarcity and an increase in the cost of transportation.
MRS also dissociated itself from reports making the rounds on social media that it is responsible for the contaminated product in Nigeria and the company is a responsible corporate citizen who will not go out of its way to harm other citizens.
According to MRS, the NNPC is the sole importer of PMS into Nigeria and the NNPC, through their trading arm, Duke Oil, supplied a cargo of PMS bought from an International trader. Litsaco and delivered it with Motor Tanker (MT) Nord Gainer.