The federal government of Nigeria has spent a whooping N60.37 billion on subsidizing fuel in November 2019, increasing by over 2000% when compared with the amount spent on subsidy in the same period 2018.
According Punch, the Petroleum Product Pricing Regulatory Agency (PPPRA), disclosed that the Nigerian National Petroleum Corporation (NNPC) spent an average of N39.59 subsidizing every litre of petrol imported into the country in November. The NNPC currently the sole importer of petrol in the country reported that Nigeria consumes between 55 million and 60 million litres of petrol every day.
Going by a daily consumption of 55 million litres and an average of N36.59 spent on subsidy per litre, it will implies that the NNPC spent about N60.37bn on petrol subsidy during the 30 days of November. Figures obtained from the PPPRA showed that an average of N30.4, N30.79, N45.64 and N39.53 was spent on petrol subsidy on November 15, 18, 21 and 26 respectively.
Meanwhile, the differences between the Expected Open Market Price and the ex-depot cost for petrol collection gave rise to the actual amount spent as subsidy daily by the NNPC. The corporation subsidises petrol to ensure that it is not sold above N145 per litre at filling stations across the country.
The NNPC, classifies its subsidy spending as under-recovery, as it has repeatedly argued that only the National Assembly could approve subsidy. Under-recovery is the additional cost that the NNPC is incurring in subsidizing the price of petrol in order to ensure that it is sold at the regulated price, even when the real market price is above this regulated rate.
However, petrol subsidy by the state owned oil firm had been fluctuating over time, with the NNPC’s financial and operations report, reportedly showing that Nigeria spent N104.35 billion, N102.24 billion, N30.64 billion and N89.19 billion in January, February, March and April respectively this year.
According to Industry operators the fluctuation in the amount spent on subsidy can be attributed to volatility in global crude prices, which affected the cost of importing refined petroleum products.