Petrol subsidy increases by ₦11.2bn weekly, despite rise in crude oil price

Obinwannem News Petrol subsidy increases by ₦11.2bn weekly, despite rise in crude oil price

Continuious rise in crude oil $63 has amounted a subsidy of Premium Motor Spirit (PMS), otherwise known as fuel; to hit at least ₦11.2bn in one week.

Obinwannem News reported last week, the actions of Labour, CSOs decry FG plans to increase fuel price following the increase of crude oil above $60 per barrel. Also, marketing officials had said With increase in crude oil price, petrol price may hit ₦190

Chief Timpre Sylvia, Minister of State, Petroleum Resources last week stated that Nigeria should prepare for “the pain associated with increase in crude oil,” since there is no provision for subsidy in budget. “NNPC cannot to bear the burden alone,” he said.

Currently the product is sold for ₦160 and ₦165 per litre across many fuel stations.

Using an expected open market price of ₦190 per litre and an average current pump price for ₦162 per litre, indicates subsidy of ₦28, with a fairly petrol consumption of about 57 million litres and a subsidy gulped ₦1.60 billion in a day; ₦11.2 billion in a week from February 5 to February 12

However, crude oil price accounts for a large chunk of the financial cost of petrol and the deregulation of petrol price by the federal government last year means that the pump price of the product would reflect changes in International oil market.

The rising price of crude oil pushed the cost of petrol quoted on platts to $543.25 per metric tonne(157.99 per litre xx using 390/$1) last Friday from $480.25 per MT (139.67 per litre) on January 7.

Marketers still depends on NNPC for the supply of the products, despite the deregulation of the downstream petroleum sector, NNPC in it’s latest monthly reports said to ensure continuous increased PM supply and effective distribution across the country, a total of 1.72 billion litres of PMS, translating to 57.44 million litres perday were supplied in November.

The corporation said it would continue to “deligently monitor the dairly stock of PMS to achieve smooth distribution of petroleum products and zero fuel queue across the nation”.

Lolo Ijeoma Njoku reporting, Obinwannem News