FG spends N1.1bn daily on fuel subsidy – Report

The latest increase in crude oil price at the global market has compelled the Federal Government to bring back fuel subsidy currently amounting to N1.1bn daily.

With Brent crude at $55.11 per barrel, the landing cost of imported petrol in Nigeria hit N160 per litre as of Friday, raising the open market price to N183/litre.

The open market price is the expected price of fuel at the filling stations.

The additional N23 is reflected in the latest Petroleum Products Pricing Regulatory Agency template.

And with the national consumption figure put at 50 million litres daily, the Federal Government subsidises the petrol purchased daily by about N1.1 billion.

Although from August 2020, a federal gazette forbade the PPPRA from interfering in the prices of petroleum products. However, the gazette states the role of the PPPRA to include intervention where the agency finds the prices too high and unjustifiable.

The price of Brent crude has been rising since November 13, 2020 when the petrol pump price was last increased in the country.

Fuel marketers in December last year expected another upward review of the pump price to reflect the rise in crude oil prices.

But a N5 reduction, effective December 14, was announced by the Federal Government after much pressure from the labour.

Minister of State for Petroleum Resources, Timipre Sylva, had said in September last year that the Federal Government had withdrawn from fixing the price of petrol.

He added that market forces and crude oil price would determine the cost of the product.

The Federal Government removed petrol subsidy in March 2020 after reducing the pump price of the product to N125 per litre from N145 following sharp drop in crude oil prices. The reduction lasted till June.

In Nigeria, increases in the pump prices of petrol were recorded in four months; from N121.50–N123.50 per litre in June to N140.80-N143.80 in July; N148-N150 in August; N158-N162 in September and N163-N170 in November.