Fuel subsidy hits N1.58bn on petrol, N1.006bn on kerosene daily font size decrease font size increase font size Print Email 07.Jul.2014 DISQUS_COMMENTS Tunde Dodondawa - Lagos Rate this item1 2 3 4 5 (0 votes) There are strong indications that the Federal Government may be considering removal of fuel subsidy soon, following increasing cost of subsidising a litre of premium motor spirit (PMS) otherwise called petrol and HouseHold Kerosene (HHK) per day. According to the pricing template of the agency responsible for calculating and determining the cost of subsidy on imported refined products, the Petroleum Product Pricing Regulatory Agency (PPPRA), the Expected Open Market Price (EOMP) of a litre of petrol is N149.80, while that of kerosene is N150.65 per litre. Nigerians consume an average of 30million litres of petrol per day while consuming an average of 10million litres of kerosene per day, according to PPPRA calculations. However, multiplying N52.80k by 30 million litres would give a whopping sum of N1,584,000,000.00 as subsidy payable on petrol daily while multiplying N100.65 by 10million litres will result into N1,006,500,000.00 as subsidy on kerosene daily. The real landing cost of petrol is N134.31 per litre while landing cost of kerosene is N135.16 per litre as at 13th June, 2014. The above pricing was calculated based on Average Platts’ Prices for the month of June 2014. According to an industry source, who spoke with the Nigerian Tribune on Sunday, on condition of anonymity, increasing subsidy payment on refined petroleum products is having an adverse effect on Federal Government finance. He noted that international market price for crude oil is highly volatile and the Nigerian economy is not immune to these shocks. According to him, “crises in Iraq, Egypt and other member nations of Organisation of Petroleum Exporting Country (OPEC) always result in high price of crude oil at the international crude market. For a very long time, a barrel of crude has been selling at above $100 and our importers are also buying at this rate. “Except our refineries are fully turn around and local investors’ plan to build private refineries come to fruition, subsidy payment may continue to sky-rocket.” He noted that when subsidy was initially removed in January 2012, subsidy payment per litre of petrol was averaging N1.32billion per day “and now it N1.584billion per day.” The Chairman, Society of Petroleum Engineers (SPE) in Nigeria, Mr Bernard Oboarekpe, told Nigerian Tribune at the weekend that the Federal Government should begin to focus on adding values to crude oil explored rather than exporting alone. He warned that the US used to be the country’s major importer of crude oil, but not anymore. “The new market is Asia and if oil is also discovered in Asia, where else will the country turn to?” he queried Meanwhile, attempts to privatise the four refineries, Port Harcourt I and II, Warri and Kaduna refineries have been met with strong resistance from the organised labour union citing loss of job by its members and exploitation of the masses by prospective owners. The refineries have been working far below capacity and at full capacity of 445000 barrels per day output, it is insufficient to fill the vacumm which will be created assuming importation of products ceases today. Nigeria remains the only OPEC member nation that depends solely on importation of refined petroleum products for its teeming population of over 160million people despite being the seventh largest producer in the world. tribune.ng/news/news-headlines/item/9922-fuel-subsidy-hits-n1-58bn-on-petrol-n1-006bn-on-kerosene-daily/9922-fuel-subsidy-hits-n1-58bn-on-petrol-n1-006bn-on-kerosene-daily
Posted on: Thu, 30 Oct 2014 09:26:55 +0000