Oil subsidy may hit N9bn as price of crude nears $100 per barrel

With the price of Brent, Nigeria’s crude benchmark touching $96.48 per barrel, the highest level since 2014, the amount paid to subsidized oil may hit N9bn, National Daily has gathered.

The Petroleum Products Pricing Regulatory Agency (PPPRa) had in March 2021 released a pricing template that indicated the guiding prices for the month.

The template showed that the petrol pump price was expected to range from N209.61 to N212.61 per litre at an average oil price of $62.22 per barrel.

Using the PPPRA template, today, with the sharp rise in oil price at N96.48, without subsidy payment, pump price for petrol should be N312- N315 per litre.

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Nigeria’s official pump price is N162-N165 per litre which is a value shortfall of N150, meaning to ensure 60 million litres are filled at an official price, NNPC will have to deduct over N9 billion from what is accrued to the federation account daily.

In December, N270.83 billion was used to cater for the cost of petroleum shortfall which comes to about N8.73 billion.

In November and October, petrol subsidy payments stood at N131.4 billion and N163 billion, respectively, according to findings.

In September, it was 149.28 billion. In August, the under-recovery cost of petrol was N173.13 billion. For July and June, it was N103.28 billion and N164.33 billion, respectively. In May, the cost of subsidy amounted to N126.29 billion.

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Also, in April, March, and February, the under-recovery amounted to N61.96 billion, N60.39 billion, and N25.37 billion, respectively.

In January, OPEC recorded that Nigeria officially pumped 1.46 million barrels per day against a target of 1.683 million BPD approved quota.

Also, in December 202, crude oil production in Nigeria fell below 1.2 million from 1.28 million recorded a month earlier costing NNPC billions.

India, Nigeria’s biggest customer is already looking at other markets for oil as it aims to meet targets for its refineries.

Unless Nigeria is able to produce enough oil, it won’t come as a surprise if a new request is sent to the National Assembly for more loans despite all other oil-producing countries smiling to the bank from sales.