FG’s daily fuel subsidy drops to N516m
The Federal Government’s daily spending on subsidy for imported petrol has further crashed to N516 million, from a previous high of about N2.06 billion in June, figures released yesterday by the Petroleum Products Pricing Regulatory Agency (PPPRA) have revealed.
Analysis of petroleum pricing data for the previous months showed that petrol subsidy dropped from an average of N2.06bn per day in June to N1.6bn in July, N955m in August, N576m in September and the latest figure of N516m for October 16, 2015.
The drop means government has been saving billions of naira which it had been paying marketers to import refined petrol in order to keep prices low.
Subsidy figures for Premium Motor Spirit (petrol) have been unsteady since January as a result of the unstable price of crude oil in the international market.
Latest data released by the PPPRA for Saturday indicated that the country’s daily subsidy per litre of fuel stood at N12.9.
Average crude oil price
Drop in average daily petrol subsidy
The overall N516m daily subsidy is realized when N12.9 per litre is multiplied by 40m litres of petrol that Nigerians, according to the PPPRA, consume daily.
The agency, in its pricing template, put the Expected Open Market Price (EOMP) of petrol at N99.9 per litre, while the regulated retail price is N87 per litre. The difference between the EOMP (N99.9) and retail price (N87) is the subsidy (N12.9) on a litre of fuel.
A rise in crude oil prices, by implication, means a rise in the amount of subsidy paid by the federal government for the importation of PMS.
The Executive Secretary of the PPPRA, Farouk Ahmed, had explained earlier in the year that although the country witnessed a period when subsidy on the product was zero and even negative, this changed based on the fact that crude oil prices had increased in the international market.
The lowest average daily petrol subsidy record since oil price began its descent in 2014 stands at N0.90 kobo per litre or N36m daily, recorded in December 2014. The subsidy figures have been fluctuating since then, rising up to N2.06bn (or N51.61/litre) in June and down to N516m (or N12.9 per litre) by Saturday.