Eight months after the removal of subsidy on petroleum products, and introduction of a “price modulation” of fuel prices, the federal government through the Nigerian National Petroleum Corporation (NNPC) has reintroduced the subsidy.

Crude oil prices were trading around $41 dollars a barrel when pump prices were increased from N97 naira to N145 naira in May 2016. Crude oil currently trades at $55 dollars a barrel. Foreign exchange rates on which the current price regime was based have depreciated from N285/$1 to N305/%$1. Parallel market exchange rates currently hover close to N500/$1.

Investigations by Nairametrics reveal that, the NNPC is currently importing over 90% of petroleum products, while major marketers buy from it at N131 naira per litre. The landing cost of petrol is currently N145 naira per litre. A N23 naira increase over the N122 naira per litre landing cost when subsidy was removed.

The Petroleum Products Pricing Regulatory Agency (PPPRA) has refused to post a price template reflecting crude oil prices on its website. Unlike the previous subsidy regime, where government made payments to marketers, the NNPC is indirectly paying the subsidy by selling at a loss. The NNPC has refused to issue a formal statement on the reinstatement of subsidy or otherwise. The monthly NNPC report for November 2016, showed the corporation making a loss of over N121 billion naira.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via onome.ohwovoriole@nairametrics.com

1 COMMENT

  1. A cursed leadership and followership.
    Nigerias dooms day is very near. All those noise makers in the dying days of the last regime have gone under and dying slowly in unprecedented pains.

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