The Federal Government of Nigeria, yesterday, announced that it spends a whopping sum of ₦120 billion ($263,248 million) monthly to subsidize Premium Motor Spirit (PMS) otherwise known as petrol.
This revelation was made by the Group Managing Director (GMD), Nigerian National Petroleum Corporation (NNPC), Mele Kyari, Communication Team at the fifth edition of the special ministerial briefings.
According to him, while the actual cost of importation and handling charges amounts to N234 per litre, the government sells at ₦162 per litre.
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He, however, said the NNPC can no longer afford to bear the cost, adding that sooner or later Nigerians would have to pay the actual cost for the commodity.
Kyari, who carefully avoided calling the payment a subsidy, said the NNPC pays between ₦100-120 billion a month to keep the pump price at the current levels, insisting that market forces must be allowed to determine the pump price of petrol in the country.
The NNPC boss said: ‘Today, NNPC is the sole importer of PMS, we are importing at market price and we are selling at ₦162 per litre today. Looking at the current market situation today, the actual price could have been anywhere between ₦211 to around ₦234 to the litre. The meaning of this is that consumers are not paying for the full value of the PMS that we are consuming and therefore, someone is bearing that cost. As we speak, the difference is being carried on the books of the NNPC and I can confirm to you that the NNPC may no longer be in the position to carry that burden and because we can longer afford to carry it on our books.
‘As we speak today, I will not say we are in a subsidy regime but we are in a situation where we are trying to exit this under-priced sale of PMS until we come to terms of the full value of the product in the market.
‘PMS sells across our borders anywhere around ₦300 to the litre and in some places up to ₦500 to ₦550 to the litre’.
Kyari added that upon full deregulation, oil markets would begin to import PMS thereby taking the burden off NNPC and bringing the direct sale-direct purchase (DSDP) Programme to an end.
‘We know there’s one major challenge why oil marketing companies have not started importing which is around access to foreign exchange and we are working on this with the Central Bank of Nigeria and as soon as that is available, oil marketing companies will also resume import of petroleum products.’
On the two agreements between Nigeria and Niger Republic for the importation of petrol from the neighbouring country to Nigeria, Sylva explained that it was a way to boost trade between the two countries.
AFRICA TODAY NEWS, NEW YORK