According to information provided by the Nigerian National Petroleum Company Limited (NNPCL), NNPC confirmed at the weekend, the subsidy bill chosen by the Federal Government increased by 17.1% last month to N525.71 billion.
The figures show that between January and August, the government paid N2.568 trillion in subsidies.
Fuel subsidies increased from N448.782 billion in July 2022 to N525.71 billion in August 2022, according to the NNPCL’s official report to the Federation Account Allocation Committee (an increase of 17.1 per cent).
According to information provided by the Nigerian Midstream and Downstream Petroleum Regulatory Authority, a 10% increase in the supply of gasoline, which increased to 71.8 million liters, was a contributing factor in the increase in subsidies.
Due primarily to theft that has reduced production, oil production in August averaged 1.18 million barrels per day, well below Nigeria’s OPEC quota of 1.8 million bpd.
The National Assembly approved N4 trillion in petrol subsidies for this year in April after the government decided to delay its plan to do away with them.
Huge fuel subsidies, inconsistencies in supply estimates, and Nigeria’s declining revenue have sparked contentious debate and brought the NNPCL to public attention.
Petrol subsidies would consume roughly N6.7 trillion of the N19.76 trillion proposed budget for the following year, according to Hajia Zainab Ahmed, Minister of Finance, Budget, and National Planning.
Mrs. Ahmed warned that the high cost of debt servicing combined with other costs could make it impossible to implement any capital projects in 2023.
Col. Hameed Ali (ret. ), Comptroller-General of the Nigeria Customs Service (NCS), questioned the NNPCL’s supply and subsidy figures.
He questioned the NNPCL’s claim that the annual subsidy cost would be N6.4 trillion.
Malam Garba Deen Muhammad, group general manager of the company’s group public affairs division, revealed in a statement that without the subsidy, Nigerians would have had to pay N462 per liter for gasoline. He continued by saying that the federal government has been subsidizing the product supply by paying N279 per litre.
He claims that the company imported 16.46 billion litres of gasoline into the nation between January and August of this year, or 68 milliliters per day. In the previous year, NNPC imported 22.35 billion liters, or 61 milliliters per day, according to the statement.
According to him, the total amount of Premium Motor Spirit (PMS) imported into the nation between January and August 2022 was 16.46 billion liters, or an average supply of 68 million liters per day.
Similar to that, imports in 2021 totaled 22.35 billion liters, or an average supply of 61 million liters per day.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) reported that the average daily evacuation (depot truck out) from January to August 2022 “stands at 67 million litres per day,” according to the NNPCL, but “daily evacuation (depot load outs) records of the NMDPRA do carry daily oscillation ranging from as low as four million litres to as high as 100 million litres per day.”
According to the company, oil marketing companies have stopped importing gasoline since the fourth quarter of 2017, making NNPCL the supplier of last resort due to rising crude oil prices and PMS supply costs that are higher than the NMDPRA cap.
At the weekend, Mr. Olumide Adeosun, Chairman of the Major Oil Marketers Association of Nigeria (MOMAN), reaffirmed that the sustainable growth of the oil industry and the Nigerian economy required the elimination of subsidies and complete deregulation of the downstream petroleum sector.
He asserts that government should completely deregulate the industry because the substantial subsidy payments are inherently unsustainable.
“The government should concentrate on providing palliatives for Nigerians, such as improving mass transit, the supply of electricity, agriculture, and education. The government may provide subsidies to the industries that would promote long-term economic growth.
The PIA 2021 is a very well-thought-out piece of legislation that, in the end, will lead to the expansion of the petroleum industry in Nigeria, so, by far, the best course of action is to move forward with its full implementation, according to Adeosun.