The Nigerian Federal Government may face monthly expenditures of approximately N236 billion to subsidize the Premium Motor Spirit (PMS), commonly known as petrol, imported through the Nigerian National Petroleum Company (NNPC) and sourced from the Dangote Petroleum Refinery.
[dropcap]T[/dropcap]he Nigerian Federal Government may spend about N236 billion monthly to subsidize petrol imports and Dangote refinery supplies, with calls to end the subsidy by Dangote himself and support from industry associations.
The Nigerian Federal Government may face monthly expenditures of approximately N236 billion to subsidize the Premium Motor Spirit (PMS), commonly known as petrol, imported through the Nigerian National Petroleum Company (NNPC) and sourced from the Dangote Petroleum Refinery.
Also read: Petroleum marketers demand clarity on Dangote refinery petrol pricing amid controversy
This estimate was highlighted by Alhaji Aliko Dangote, President and Chief Executive of Dangote Group, who has urged the government to completely eliminate fuel subsidies.
According to Dangote, removing the subsidy would provide clarity on the actual petrol consumption in Nigeria. This sentiment is echoed by the Independent Petroleum Marketers Association of Nigeria (IPMAN) and the Centre for Promotion of Public Enterprise, both of which support the call for subsidy removal.
In recent developments, it was reported that members of the Major Energies Marketers Association of Nigeria (MEMAN) lifted over 50 million litres of PMS from the Dangote refinery in the past week.
The pricing dynamics reveal that NNPC sells petrol to marketers at N766 per litre, while the government purchases it from the Dangote refinery at N898 per litre, resulting in a subsidy of N132 per litre.
Dangote commenced PMS release into the domestic market on September 15, 2024, with a projected output of 25 million litres daily.
This implies that NNPC is subsidizing Dangote petrol at about N3.3 billion daily, totaling N99 billion over a month. Meanwhile, the average daily consumption of PMS in Nigeria is approximately 45.7 million litres, with the balance expected to be covered by imports.
The situation further complicates as the landing cost of imported petrol is around N1,117 per litre, with NNPC selling it to independent marketers at N895 per litre, leading to a subsidy of N222 per litre.
This results in an estimated subsidy of N137.86 billion for the month on imported petrol alone.
Altogether, these calculations indicate a potential total subsidy expenditure of N236.86 billion monthly for the government through NNPC for both Dangote and imported petrol.
Dangote emphasizes that subsidies inflate prices and urged for their removal to better reflect market dynamics and actual consumption levels.
Source: Read more at premiumtimesng.com
