Nigeria’s Fuel Subsidy Costs Exceed N700bn Monthly – IPMAN

The Independent Petroleum Marketers Association of Nigeria (IPMAN) has warned that Nigeria’s fuel subsidy expenditure might exceed N700 billion monthly.

Mohammed Shuaibu, Secretary of IPMAN Abuja-Suleja, disclosed this in a statement on Monday, responding to data released by the Major Energies Marketers Association of Nigeria (MEMAN). The MEMAN data indicated that the landing cost of petrol as of the previous day was N1,117 per liter.

Shuaibu suggested that the Nigerian National Petroleum Company Limited (NNPC) and the Nigerian government might not be transparent about the actual fuel subsidy expenditure. He cautioned Nigerians to brace for potential fuel price hikes.

“Petrol prices are influenced by global market demand and supply. When there is a global price increase, Nigeria will experience it too. The N1,117 per liter price is affected by both our foreign exchange rate and global PMS costs. NNPC, as the sole importer, is not being forthcoming. Data from major marketers clearly shows that the landing cost of petrol is above N1,100 per liter, implying a monthly subsidy surpassing N700 billion. We should be prepared for any sudden price jumps,” Shuaibu explained.

Despite these claims, the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has repeatedly insisted that fuel subsidies remain abolished in Nigeria.

Further analysis revealed that although petrol prices range from N617 to N750 per liter depending on the location, the ex-depot price set by NNPC is N585 per liter. This results in a N532 difference between the landing cost of N1,117 and the ex-depot price.

According to the Federal Ministry of Petroleum Resources, with a daily petroleum consumption of 44.3 million liters in October 2023, multiplied by the estimated N532 subsidy per liter, the daily subsidy expenditure amounts to N23.57 billion, totaling over N700 billion in 30 days.

This situation arises amid a dispute between Dangote Refinery and the Nigerian Midstream and Downstream Petroleum Regulatory Authority over substandard petroleum products. On Monday, Lokpobiri presided over a meeting with the heads of the Nigerian Upstream Petroleum Regulatory Commission and NNPC.

It is noteworthy that former Kaduna State governor, Mallam Nasir El-Rufai, claimed that the President Bola Tinubu-led Federal Government is spending more on fuel subsidies than before. Similarly, the President of the Trade Union Congress, Festus Osifo, suggested that the government is applying a quasi-fuel subsidy on petrol.