FG’s daily fuel sub­sidy drops to N516m

Daily Trust - - BUSINESS - By Daniel Adugbo

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.

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