According to the latest performance report of the Nigerian National Petroleum Corporation (NNPC), the amount paid on subsidizing Premium Motor Spirit (PMS) hits N326.43 billion as at April 2019.
The NNPC disclosed in the report that petrol subsidy increased by N58.6 billion in April 2019 to reach its third-highest so far this year at N89.2 billion. When compared to the N30.64 billion disclosed in March 2019 by the state-run oil company, petrol subsidy went up by 191%.
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Further analysis showed that the NNPC has spent a combined sum of N326.43 billion on PMS subsidy between January 2019 and April 2019, spending N104.35 billion in January, N102.24 billion in February, N30.64 billion in March, and N89.2 billion in April.
What you should know: NNPC has always maintained that only the National Assembly can approve subsidy. It classifies subsidy as under-recovery which is an additional cost incurred by subsidizing the price of PMS in order to ensure that it is sold at the regulated price of N145 per litre, even when the real market price is above this rate.
In a recent development, the IMF advised Nigeria to cut down on oil subsidy in reaction to low global oil prices and the country’s depleting revenue, as earlier published on Nairametrics.
Meanwhile, in the face of increasing debt stock and depleting foreign reserves, it is safe to say that the Federal Government cannot continuously afford to pay an increased subsidy. The subsidy is paid by the Nigerian government to keep the price of PMS at the regulated price of N145 per litre.
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Generally, subsidization of PMS has been a subject of discussion among the stakeholders of the Nigerian economy, has several groups have called for the removal of subsidy payment, stating that the mony could be used to tackle pressing issues facing the Nigerian state.