NNPC Says No Petrol Price Increase In May As Fuel Subsidy Rises To N500bn

Despite the rise in global oil prices, the Federal Government kept the pump price of Premium Motor Spirit (petrol) unchanged in the first five months of this year, resulting in a N500 billion subsidy on the commodity.

On January 11, it was announced that a sustained rise in global crude oil prices had brought the landing cost of imported petrol closer to current pump prices in Nigeria, signaling a return to the age of petrol subsidies.

According to the Petroleum Products Pricing Regulatory Agency’s petrol pricing template, the landing cost of petrol increased from N143.60 per litre in December to N158.53 per litre on January 7, with the estimated open market price (retail price) of N181.53 per litre.

According to the PPPRA’s petrol pricing template, the estimated open market price of petrol rose to over N200 per litre on February 5, as oil prices approached $60 per barrel.

Since December, the price of petrol at many filling stations in Lagos has remained between N160 and N165 per litre.

Mele Kyari, the Group Managing Director of the Nigerian National Petroleum Corporation, said on March 25 that the Federal Government was subsidizing gasoline with N100 billion to N120 billion per month.

He explained that although the real cost of importation and handling charges is N234 per litre, the government has been selling at N162 per litre, resulting in a loss.

“Today, NNPC is the only company that imports PMS. We are currently importing at market price and selling at N162 per litre. According to the current market situation, the actual price may have ranged from N211 to N234 per litre,” Kyari said at the time.

According to the monthly figure given by the NNPC chief, petrol subsidy would cost N480 billion from February to May, while the company is expected to spend at least N20 billion subsidizing the commodity in January.

Mr Mike Osatuyi, the National Operation Controller of the Independent Petroleum Marketers Association of Nigeria, said it was clear that the petrol subsidy had resurfaced.

“We are no longer deceiving us; they have admitted that a subsidy exists. As a result, we will continue to bear the burden until the government implements infrastructure to mitigate the impact of high gasoline prices,” he said.

“We have no options because the government imports petrol,” he said when asked if marketers were happy with the return of subsidies. They have the yam and the knife. So they’ll tell us where to go, and we won’t be able to refuse.”

Mr Adetunji Oyebanji, Chairman of the Nigerian Major Oil Marketers Association, said the NNPC’s announcement that the ex-depot price of petrol would not adjust in May meant that the subsidy would continue. “It means the status quo is maintained; everything stays the same,” he said.

NNPC has been the sole importer of petrol into Nigeria for more than three years, and depot operators, large and independent oil marketers rely on it for supplies.

Meanwhile, NNPC GMD Kyari declared on Monday that the ex-depot price of PMS would not be increased in May.

Despite the increase in the actual cost of the product, the national oil company has retained an ex-depot price of N148/litre since February, resulting in a monthly subsidy of over N120 billion.

The cost of gasoline at depots, from which filling stations buy the product before dispensing to final customers, is known as the ex-depot price.

After the NNPC intervened in the impasse between the PTD and the National Association of Road Transport Owners, Kyari declared on Monday that the planned strike by Petroleum Tanker Drivers had been suspended.

On Monday, the NNPC posted these on its official Twitter account.

“Following GMD #NNPC Mallam @MKKyari’s involvement in the National Association of Road Transport Owners/Petroleum Tanker Drivers impasse, PTD has just declared the suspension of its scheduled strike until both parties have reached an agreement,” the statement said.

“In addition, the GMD declared that the ex-depot price of Premium Motor Spirit will not rise in the month of May 2021.”

The NNPC announced in March that it would keep its ex-depot gasoline price until ongoing talks with organized labor and other stakeholders were completed.

According to reports, the dispute with labor over the price of gasoline has yet to be resolved, which explains why the current ex-depot price has remained unchanged amid global oil price fluctuations.