Petroleum landing cost now N216, as daily subsidy hits N4.64bn

Arakunle Kayode

As a result of the recent increase in global prices in oil and the depreciation of Naira against the dollar, the cost of the landing of Premium Motor Spirit (petrol) imported to Nigeria jumped to N216.31 per liter.

A price template indicating guiding prices for the month was released by the Petroleum Products Pricing Regulatory Agency in March.

The template, which revealed that petrol pump prices were supposed to range from N209.61 to N212.61 per litre, sparked widespread outrage and was eventually removed from the agency’s website while the pump price in many filling stations in the country has remained between N162 and N165 per liter

The template is based on the average of February price of $62.22 per barrel and a dollar exchange rate of N403.80, which showed the cost of N189.61 per liter of petroleum landing.

The price of crude oil, representing a large fraction of the final petroleum costs, closed last week at 65,98 dollars per barrel, as at 19:09 pm on Tuesday it stood at 66.41 dollars per barrel.

Mele Kyari the Group Managing Director, Nigerian National Petroleum said that the actual petrol price could have been anywhere between N211 and N234 per liter in view of the current market situation.

He further in his statement said that the federal government had subsidized N100bn to N120bn per month for N162 per liter of petroleum (N3.3bn-N4 bn daily).

The expected product pump price was N239.31 per liter on April 16 according to the PPPRA template he said expected N239,31 per liter retail prices and the existing N162 pump price per liter indicate that a grant of N77,31 per litre is being granted.

The NNPC’s daily oil consumption is approximately 60 million liters and the subsidy amounting to N77,31 liters amount to N4.64 billion per day on 16 April the rising price of crude oil dropped from the average price used by PPPRA for March of $561.96 (N169.22 per liter) for petroleum quoted at Platts by $642.25 per tonne (N194.39 per litre) Freight costs rose from an average of $21,63 (N6,51) per Mt used by PPPRA in the month of March last Friday to $29,98 per MT (N9,03 per liter).

The pump price will be based on the total cost of the landing, the wholesale margin (N4.03), the admin charge (N1.23). Transporter’s benefit (N3.89), the N7.51 bridging fund (N6.19). Despite deregulation of the downstream oil sector, marketers still rely on the NNPC, which in recent years has been the only importer of petrol into the country.