FG makes over N2bn daily selling fuel at new pump price

Fresh facts and statistics have suggested that the recent reduction in petrol pump price in Nigeria from N145 to N125, may have been a Greek gift as the Federal Government is making well over N2bn daily selling the product at the new pump price.

Otherwise, following the last pricing template for petrol published on the website of the PPPRA before it was brought down, the landing cost for petrol, as at 16th March 2020, was N64.32 per litre. By adding the total margins of N19.37 for marketers, the Expected Open Market Price (EOMP) was N83.69.

Further investigations show that crude oil price was selling at $30 per barrel on 16th March 2020. On Thursday as at 18.45GMT, Brent crude was selling at $30.17 per barrel while OPEC Basket was selling at $27.31 per barrel.

By implications, the difference between N125 – N83.69 is N41.31 per litre.

Therefore, on the average of 50 million litres daily consumption of petrol, FG is making an excess or surplus of (41.31 x 50million litres) N2,065,500,000 daily from the sale of petrol to Nigerians at N125 per litre.

This means the recommended retail price of N125 per litre is very much higher than what should have been the price if determined by the forces of demand and supply.

Industry sources posited that the FG can afford to sell petrol at N100 per litre without subsidy payment whenever crude oil sells at less than $30 per barrel.

Another trending conspiracy theory trailing the pump price drop suggests that the massive acceptance of the reduction can best be described as government’s bait and or strategy to either remove fuel subsidy or licence to jerk up pump price even over and above the former price of N145 as soon as global oil price crosses $60 mark to clearly define full deregulation of the downstream oil sector in the near future.

Already, the government had hinted that there shall be a monthly review of pump price relative of global crude oil price movement.