- Nigeria can’t celebrate more money despite oil prices trading at above $130 and it is becoming a great concern
- According to a report Nigeria is spending at least N400 to keep the pump price of petrol at N162-N165 which is about N98 for every N100 made from oil revenue
- NNPC has consistently complained about the rising oil prices nothing is good news for Nigeria due to subsidy payments
In January, state governments were left in awe when it was revealed that there will be no money coming from the Nigerian National Petroleum Corporation into the account of the federal government despite oil trading at above $90 per barrel.
The development underscored how a combination of factors, including declining oil production, rising subsidy payments and high oil production costs.
It seems this problem is not going away anytime soon as oil prices now trade above $130 per barrel and could hit $300 according to Russia.
Nigeria's oil production and subsidy payment
According to data from the Organization of the Petroleum Exporting Countries, Nigeria's oil production level was 1.39 million daily in January 2022.
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With oil at $130 a barrel, Nigeria might be making at least N75.6 billion($180.7m) per day, but this windfall is transient.
According to The Punch, with rising oil prices, a litre of petrol now costs N550 to N600/litre, compared to Nigeria's official pump price of N162-N165 per litre. This indicates that the Federal Government is paying at least N400 per litre to maintain the price as low as possible.
The NNPC has consistently said that Nigerians consumes 60 million litres per day, implying that the subsidy payment may be N24 billion per day (400 x 60m).
This indicates that for every N100 received from crude export sales, Nigeria spends at least N32 to keep the price low.
Refineries gulp over N100bn in one year
Meanwhile, data from NNPC shows that from January of 2021 to January 2022 it has spent over N100bn on refinery rehabilitation.
Nigeria has four refineries located in Port Harcourt, Kaduna and Warri with a combined capacity to refine 445,000 barrels of crude oil per day, however, no oil has been produced for years.
FG plans clampdown on black marketers
In other news, the federal government may clamp down on black marketers of petroleum products soon, even as it tackles the scarcity of the product headlong.
A source in the midstream and downstream regulatory authority told Legit.ng that the activities of the black marketers were worrisome and if serious actions and measures were not taken, the current scarcity won’t disappear as expected.
He said that as the federal government pushes more litres of fuel into filling stations across the country, black marketers were out to sabotage the effort.