Subsidy ‘returns’ as FG leverages NNPC to manage market shocks

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There are indications that the Federal Government may have returned subsidy payment on Premium Motor Spirit (PMS), using the supposed commercialised Nigerian National Petroleum Company Limited to manage the market shocks and maintain monopoly of the downstream segment of the nation’s oil and gas industry. [ad] According to The Guardian analysis, about N318 billion (N10.6 billion) monthly losses are now recorded on petrol and may be calculated as under-recovery by the supposed NNPC Limited. Similar development had played out under the former administration of Muhammadu Buhari, where the government secretly returned subsidy and called it under-recovery in NNPC’s books.

• N318 billion subsidy now paid monthly • Marketers lament inability to import as NNPC maintains monopoly with FX access There are indications that the Federal Government may have returned subsidy payment on Premium Motor Spirit , using the supposed commercialised Nigerian National Petroleum Company Limited to manage the market shocks and maintain monopoly of…• Marketers lament inability to import as NNPC maintains monopoly with FX...

Coming weeks after President Bola Tinubu said there would no longer be increase in pump price of PMS and days after NNPC’s Huub Stokman took over as Chairman of the Major Oil Marketers Association of Nigeria , some marketers told The Guardian yesterday that the state oil firm is now subsidising through its access to foreign exchange.

The addition of freight costs, lightering costs , distribution margin, ancillary costs by Nigerian Midstream Downstream Regulatory Authority , Nigerian Port Authority and Nigerian Maritime Administration and Safety Agency as well as marketers’ margin stands at about N90 to N105. When the current pump price is compared with other deregulated products in the country, diesel and kerosene are selling between N800 and N900 per litre. The price of kerosene/jet fuel at the international market as of last month of August is $1,036.60 per metric tonne, which was almost the same as PMS. Diesel at the international level traded lower during the period at $952.85 per metric tonne.

“We are in trouble. There is a need for the government to come into this matter urgently, otherwise we will have a problem. Definitely the price of PMS will go up as much as the dollar price goes up. If you are exchanging $1 for N950, it will go up.”

 

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