FG Spends N15.6bn On Fuel Subsidy In 7 Days
There are strong indications that the provision of N450 billion for fuel subsidy in 2020 budget may be inadequate because the Federal Government has already spent about N15.6 billion on subsidy on premium motor spirit (PMS), otherwise called petrol, in just seven days.
According to Saturday Tribune findings, between Wednesday, 1 January and Tuesday, 7 January, 2020, the Nigerian National Petroleum Corporation (NNPC) spent the sum of N15,593,220,879.86 to subsidise imported petrol.
The Federal Government also subsidises the cost of transporting each litre of petrol from Lagos to every part of the country through the Petroleum Equalisation Fund (PEF) or the ‘bridging fund’.
According to data obtained from the website of the Petroleum Products Pricing Regulatory Agency (PPPRA), on 1 January, 2020, the NNPC distributed 522,000 litres of petrol with subsidy cost of N48.78 per litre, totaling N25,463,160.00 as fuel subsidy for the day; on 2 January, 2020, the corporation distributed 77,189,434 litres of petrol with subsidy cost of N48.78 per litre, totaling N3,765,300,590.52 for that day; on 3 January, 2020, a total of 69,952,425 litres was distributed with subsidy cost of N49 per litre, totaling N3,427,668,825.00 for that day; on 4 January, 2020, a total of 17,604,418 litres was distributed with subsidy cost of N49.00 per litre, totaling N862,616,482 as fuel subsidy for that day.
Also, on 5 January, 2020, a total of 1,516,000 litres of petrol was distributed with subsidy cost of N50.22 per litre, totaling N76,133,520.00 as fuel subsidy for that day; on 6 January, 2020, a total of 73,200,100 litres was distributed with a subsidy cost of N50.22 per litre, totaling N3,676,109,022.00 as fuel subsidy payment for that day and on 7 January, 2020, a total of 81,899,447 litres was distributed with subsidy cost of N46.22 per litre, totaling N3,785,392,440.34 as fuel subsidy for that day.
The summation of the above figures gives a total of N15,593,220,879.86 as fuel subsidy payment for the first week of the year.
If the same consumption pattern is assumed for the year – even though it is expected to skyrocket immediately the national borders are opened – then the Federal Government will be spending an estimate of N810,847,485,752.72 (N15,593,220,879.86 multiplied by 52 weeks in a year) as fuel subsidy, which is higher than the N450 billion earmarked for same fuel subsidy in the 2020 budget.
The estimate excludes the bridging fund, which is the cost of transporting petrol from Lagos depots to other parts of the country to enable marketers and dealers to sell petrol at N145 per litre (uniform pricing).
The Federal Government is spending this much to ensure uniform pricing throughout Nigeria and to also ensure fuel availability.
The NNPC, as of 8 January, had 2,386,396,380 litres as reserves which amounted to 42.77 days of fuel sufficiency. This implies that without importing any petrol today, Nigeria has a stock that will last for 42 days, three hours and 20 minutes.
Experts have argued in favour of subsidy removal on refined petroleum products, including petrol, and full deregulation of the downstream sector.