(4 minutes read)
· Nigeria may resort to removal of subsidy on Premium Motor Spirit (PMS), otherwise called petrol, pushing up the petrol prices to an extent. As on January 14, 2022, petrol price per litre was N403
· The price was kept at that level by extending a subsidy of N241 on every litre sold in the country
· According to an official estimate, petrol per litre costs N349 from country of import. The freight and landing cost push the figure to N384.
Nigeria may resort to removal of subsidy on Premium Motor Spirit (PMS), otherwise called petrol, pushing up the petrol prices to an extent. As on January 14, 2022, petrol price per litre was N403. The price was kept at that level by extending a subsidy of N241 on every litre sold in the country.
According to an official estimate, petrol per litre costs N349 from the country of import. The freight and landing cost push the figure to N384. The distribution margin and bridging fund in transport logistics further push the cost to N403. A recently held meeting of the Nigeria Governors’ Forum (NGF) had decided to hold parleys with the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) on the proposed removal of subsidy on petrol since they have been resisting this move consistently.
The NLC has threatened a nationwide protest against the Nigerian government over its proposed increase in the pump price of petrol. The National Economic Council (NEC) is toying with the idea to remove the subsidy element in June. Till that time, the government has provided for subsidy in the last Budget, which expires in June this year.
The crude oil price is currently about US$89 per barrel pushing landing cost and retail price to record high. The government sources say that the revenue outgo as subsidy is huge that the government cannot afford to continue to absorb that any more. Therefore, the move to phase out the subsidy should be accepted by all with a pinch of salt. It may be recalled that a move to increase the pump price in December 2021 met with deadlock. The labor unions wanted the price to be kept at standstill. The NLC and TUC were furious over repeated hikes in petrol price. They forced the Federal Government to a dialogue, where the Nigerian National Petroleum Corporation (NNPC) agreed to slash N5 from N167.44, a development which the Minister of Labor and Employment, Dr. Chris Ngige, said would bring down the price of petrol to N162.44.
It may be noted that Nigeria is the highest producer of crude oil in Africa. It is a paradox that the country is still importing fossil fuel due to lack of refining capacities in the country. The mined out oil is sent abroad for refining and re-imported into the country at a higher price.
