- The Federal Government reportedly paid about N169.4 billion as a subsidy in August 2023
- A report said the Nigerian National Corporation Company Limited (NNPC) paid subsidy from NLNG dividends
- The reason, the report said, is to keep petrol at the current price of N617 per litre
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A recent report says that the Nigerian government secretly paid about N169.4 billion as a subsidy to keep petrol at N620 per litre in August.
Reports have suggested that the current petrol price should be more sustainable given the exchange rate and the international crude oil price selling at over $95 a barrel, indicating a return of subsidy.
Current price suggests return of subsidy
Daily Trust reports that a document by the Federal Account Allocation Committee (FAAC) reveals that the Nigerian Liquified Natural Gas (NLNG) paid about $275 million as dividends to Nigeria through NNPC. In comparison, NNPC used about $220 million at N770 per dollar to pay for petrol subsidy and held back $55 million.
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The FAAC report indicates that the subsidy has returned, and NNPC reportedly pays with the NLNG dividends' proceeds.
Ex-President Muhammadu Buhari's administration reportedly spent the highest amount on subsidies.
The Oil and Gas Industry Report by Nigeria Extractive Industries Transparency Initiative (NEITI) said that the cost of petrol subsidy from 2015 to 2020 was N1.99 trillion.
According to reports by the Nigerian National Petroleum Corporation (NNPC), petrol subsidy cost in 2021 was about N1.57 trillion and another N1.27 trillion from January to May 2022.
The Nigerian Government also budgeted N3 trillion to cover the cost of petrol subsidy from June 2022 to June 2023.
Buhari's government reportedly paid highest petrol subsidy
The entire cost revealed that under President Buhari, the Government spent about N7.83 trillion in petrol subsidies.
The international price for Brent Crude has recently crossed about $95 per barrel, with experts predicting that it will cross the $100 dollar threshold by December 2023.
The US Texas Intermediate crude futures spiked by more than 1% to $92.246 per barrel, while the international Brent crude futures crossed $95 per barrel.
The increase in the price of crude is expected to drive the price of petrol, but the decision of the Nigerian Government to keep the price at N617 per litre indicated that the subsidy on PMS was quietly restored.
Marketers promise not to increase petrol prices despite naira depreciation
Also, the depreciation of the Nigerian currency, the naira, makes it challenging for marketers to access FX in the market, with NNPC being the largest importer of petrol.
The Chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Okoronkwo, told Legit.ng that the $3 billion crude oil swap deal between NNPC and AfreximBank would be used to source for petrol.
He said there is no intention from the marketers to increase petrol prices despite the naira depreciation.
Marketers reveal petrol price will reduce by N70/litre as Tinubu fixes date for PH Refinery production
Legit.ng reported that oil marketers say that immediately after local refining of petroleum products is fully operational, the cost of petrol will go down by at least N70 per litre.
Mike Osatuyi, the National Controller of Operations for the Independent Petroleum Marketers Association of Nigeria (IPMAN), said this when recently discussing the benefits of the Nigerian government’s investment in functional refineries.
Osatuyi told journalists that despite contracts for refurbishing the refineries being awarded, it be a good development for the repairs to be finalised soon to reduce the stress and substantial burden of imports on the country.