Shipping cost and other charges at the ports now consume about 95 percent of the amount paid as fuel subsidy by the federal government due to the fall in the crude oil at the global market.
According to the template of the Petroleum Products Pricing Regulatory Agency (PPPRA), the C+F (Cost, Insurance and Freight) for the Premium Motor Spirit popularly known as petrol per metric ton was $603.82 equivalent to N88.7per litre in local currency as of Thursday September 3.
This is just N1.7 above the official price per litre at the fuel stations (if the country has capacity to refines its oil locally). With the fall of crude oil price at international market to about $50/barrel, the expected open market price of the PPPRA otherwise known as pump price per litre as of that date was N115.54 signifying under recovery or subsidy of N28.54/ltr.
The landing cost (which added all the landing expenses such as trader’s margin, Nigeria Port Authority charges, jetty depot thru put charges, lightering expenses and storage cost) was $681.07 /mt equivalent to N100.05 per litre in local currency. Other distribution margin such as (retailers, transporters, dealers, bridging fund, Marine Transport Average (MTA) constitute the N15.49 on the charges on the template.
Based on the template, the country will be paying about extra 28.54/litre of petrol as subsidy. Authorities of the Nigerian National Petroleum Corporation (NNPC) are gearing up to improve local refining which may likely reduce the subsidy margin on the two products- Petrol and Kerosene. Currently, Kaduna and Port Harcourt refineries are blending even though at below average but Warri Refinery is undergoing some maintenance.W
