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FG fuel subsidy drops by 94% – NBS

…FG fails to publish template

By Udeme Akpan

abuja—The Federal Government incurred N3.16 per litre as fuel subsidy last week, showing 94 per cent drop from N50 per litre recorded in 2016, following the low oil price in the global oil market.

The National Bureau of Statistics (NBS) made the disclosure in its latest report released yesterday.

Using the major marketers’ data, the report which put the landing cost of petrol at N128. 79 per litre put the actual price of the product at N148.16.

The report also put the pump price at N145 per litre, meaning that the federal government currently subsidised the balance of N3.16 per litre.

But based on the Nigerian National Petroleum Corporation (NNPC) data, the report which put the landing cost of petrol at N126.20 per litre put the actual price of the product at N145.57, meaning that the federal government subsidised the balance of N0.57 per litre.

The report did not provide details, including margins to stakeholders such as marketers and transporters.

However, investigations showed that the Petroleum Products Pricing Regulatory Agency (PPPRA) has not published its template to guide local and foreign investors in the sector since January, this year.

The Executive Secretary of PPPRA, Abdulkadir Saidu Umar, could not be reached for comments.

Assistant General Manager, Corporate Affairs, PPPRA, Mr. Lanre Oladele, also declined to comment on the inability of the agency to make its template public.

Meanwhile, the Nigerian National Petroleum Corporation, NNPC, disclosed that it recorded ‘under recovery’ of N49.86 billion between January and March 2017.

Under-recovery in downstream petroleum marketing parlance is when the expected open market price of PMS – which includes the cost of importation and distribution of the commodity, such as marketers’ margins, landing cost and freight cost — is below the approved official retail price at the pump.

Giving a breakdown of the figures, the NNPC in its latest financials, the March 2017 Monthly Financial and Operations Report, had stated that it recorded under-recoveries of N37.26 billion, N6.3 billion and N6.3 billion for January, February and March 2017 respectively.

Though the NNPC did not state the amount per litre, the total amount was charged from proceeds of its domestic crude oil and gas sales.

The Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachickwu had stated that the novel price modulation mechanism currently in place will ensure that the Federal Government records zero expenses on fuel subsidy in 2016.

Delivering the 45th Convocation Lecture of the University of Nigerian Nsukka under the theme: The Petroleum Industry and the Future of the Nigerian National-Oil Resource Management and the Implication for National Security & Economic Survival, Dr. Kachikwu had noted that the zero fuel subsidy regime is already in place and would be sustained based on the prevailing modified pricing template for petroleum products which has eliminated extraneous cost elements.

“Without necessarily removing subsidy, the government will spend zero amounts in subsidy in 2016. This may sound unbelievable to some people but that is part of the change agenda of the present administration of President Mohammadu Buhari”

But a few days ago, Dr. Kachikwu, stated that the downstream and midstream sectors of the Nigerian petroleum industry continue to remain challenged, disclosing that the price of Premium Motor Spirit, PMS, was rising above the current pump price.

He said, “The environment has since changed after the review in May 2016. When we did all these, pricing for crude oil was more in the $25 to $30 per barrel; today, it is in excess of $54, which is fantastic because it means that our revenue stream is improving.”

The post FG fuel subsidy drops by 94% – NBS appeared first on Vanguard News.

This post was syndicated from Vanguard News. Click here to read the full text on the original website.

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