Nigeria’s fuel subsidy payment exceeds $433mln monthly

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The Independent Petroleum Marketers Association of Nigeria (IPMAN) has raised concerns over the federal government’s subsidy payments.

IPMAN warned that Nigeria’s fuel subsidy expenditure could exceed N700 billion monthly.

This information was disclosed by Mohammed Shuaibu, Secretary of IPMAN, Abuja-Suleja, in a statement on Monday.

Shuaibu was responding to data released by the Major Energy Marketers Association of Nigeria, which indicated that the landing cost of petrol as of the previous day was N1,117 per litre.

Commenting on the data, Shuaibu expressed doubts about the accuracy of the Nigerian National Petroleum Company Limited (NNPC) and the government’s fuel subsidy expenditure reports. He cautioned Nigerians to brace for potential fuel price hikes.

“Petrol prices are influenced by international market demand and supply. When global prices rise, we should expect similar increases in Nigeria,” Shuaibu explained.

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“The N1,117 per litre cost is influenced by both our foreign exchange rate and the global PMS cost. NNPC, as the sole importer, is not being transparent with us.”

He further emphasized that data from major marketers indicated the landing cost of petrol was over N1,100 per litre, suggesting that the monthly subsidy has surpassed N700 billion. “This means we should be prepared for price jumps at any time,” Shuaibu added.

Despite these concerns, the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has repeatedly insisted that fuel subsidies remain removed in Nigeria.

Further analysis revealed that while petrol prices range from N617 to N750 per litre depending on location, the ex-depot price set by NNPC is N585 per litre. This creates a gap of N532 between the landing cost and the ex-depot price.

According to the Federal Ministry of Petroleum Resources, with an October 2023 consumption figure of 44.3 million litres and an estimated subsidy of N532 per litre, the daily subsidy spending amounts to N23.57 billion. Over 30 days, this totals more than N700 billion.

This issue arises amidst a dispute between Dangote Refinery and the Nigerian Midstream and Downstream Petroleum Regulatory Authority over substandard petroleum products.

Meanwhile, on Monday, Lokpobiri presided over a meeting with heads of the Nigerian Upstream Petroleum Regulatory Commission and NNPC.

Former Kaduna State Governor Mallam Nasir El-Rufai had previously claimed that the Bola Tinubu-led federal government is paying more on fuel subsidies than before.

Similarly, Trade Union Congress President Festus Osifo suggested that the government is implementing a quasi-fuel subsidy on petrol.