Perhaps for the first time, Nigeria now makes some profit from a litre of Premium Motor Spirit (PMS) or fuel. It was N14.28 last Monday, which is a huge departure to from a few months ago when the Federal Government paid the same amount to petroleum products marketers.
Indeed, outstanding payment for subsidy claims caused severe fuel scarcity in Nigeria some months ago because government delayed to pay accumulated subsidy of about N413 billion to the marketers.
However, government earned about N2.6 billion as refund from the Nigerian National Petroleum Corporation (NNPC) and other petroleum marketers which is the difference between the landing cost of importing petrol and the government approved pump price.
As at February 16, 2016 the NNPC and other fuel marketers were refunding to the government an average of N13.81 per litre. During formal handing over of the management of the agency to his successor, the outgoing Executive Secretary, Petroleum Products Pricing Regulatory Agency (PPPRA), Farouk Ahmed said:
“As of the close of the market on Wednesday, February 17, 2016, the subsidy element in the pricing template came down from N74.39 per litre in 2011 to minus N8 per litre for PMS.
“What this means is that the government now would be collecting N8 per cent every litre of petrol imported by NNPC and the other marketers, as against the usual practice where government was paying them subsidy.”
According to the pricing templates for both commodities, Nigeria officially stopped subsidy on petrol, on January 1, 2016, and ended the subsidy regime on kerosene on January 23 this year. Analysts adduced this to the dwindling revenue from crude oil.
Official records say Nigeria officially consumes about 40 million litres of petrol daily. It means government must have made extra cash of N15.88 billion from the sale of petrol alone since stopping its subsidy when multiplied by the average over recovery of N9.23 per litre and the number of days between January and middle of February.