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Petrol Subsidy May Hit N11.2bn Per Week

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Petrol Subsidy May Hit N11.2bn Per Week

The subsidy on Premium Motor Spirit, popularly known as petrol, may have gulped at least N11.20bn in one week as the rise in global oil prices pushed up the landing cost of the product.

On February 5, when oil price neared $60 per barrel, the expected open market price of petrol rose to over N200 per litre, based on the petrol pricing template of the Petroleum Products Pricing Regulatory Agency.

The product is currently being sold at between N160 and N165 per litre at many filling stations in Lagos.

Using an expected open market price of N190 per litre of petrol and an average current pump price of N162 per litre indicates a subsidy of N28 per litre.

With a daily petrol consumption of about 57 million litres and a subsidy of N28 per litre, it means subsidy gulped N1.60bn in a day and N11.20bn in a week (February 5 to 12).

The media had reported last week that the landing cost of petrol rose to N179.67 per litre on February 5 from N158.53 per litre on January 7, with the expected open market price (pump price) of the product increasing to N202.67 per litre from N181.53 per litre.

Crude oil price accounts for a large chunk of the final cost of petrol, and the deregulation of petrol price by the Federal Government last year means that the pump price of the product will reflect changes in the international oil market.

The rising price of crude oil pushed the cost of petrol quoted on Platts to $543.25 per metric tonne (N157.99 per litre, using N390/$1) last Friday from $480.25 per MT (N139.67 per litre) on January 7.

The international oil benchmark, Brent crude, extended its rally on Monday, rising by $0.88 to $63.31 per barrel as of 7:10pm Nigerian time.

The Nigerian National Petroleum Corporation, which has been the sole importer of petrol into the country in recent years, is still being relied upon by marketers for the supply of the product despite the deregulation of the downstream petroleum sector.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, said last week that Nigerians should prepare for the pain associated with the increase in crude oil price.

According to him, as desirable as the increase in oil price is, it has serious consequences as well on petroleum product prices.

“So we want to take the pleasure and we should as a country be ready to take the pain. Today, the NNPC is taking a big hit from this. We all know that there is no provision in the budget for subsidy. So, somewhere down the line, I believe that the NNPC cannot continue to take this blow. There is no way because there is no provision for it.”

“As a country, let us take the benefits of the higher crude oil prices and I hope we will also be ready to take a little pain on the side of higher product prices.”

The NNPC said in its latest monthly report that to ensure continuous increased PMS supply and effective distribution across the country, a total of 1.72 billion litres of PMS, translating to 57.44 million litres per day were supplied in November.

The corporation said it had continued to diligently monitor the daily stock of PMS to achieve smooth distribution of petroleum products and zero fuel queue across the nation.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Economy

Nigerians Struggle as Sachet Water Prices Hit Record Highs Amidst Economic Hardship

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As economic challenges persist in Nigeria, citizens face yet another hurdle of soaring prices of sachet water, a vital source of drinking water for many.

Sachet water, colloquially known as ‘pure water,’ served as a convenient and inexpensive option for hydration, with prices starting at N5 in the early 2000s.

However, over the years, the cost has steadily climbed to as high as N50 per sachet.

This exponential increase has forced many Nigerians to seek alternative sources of water, including boreholes and wells, despite concerns about their safety.

Residents across the country, from Lokoja to Abuja, lament the financial strain caused by the inflated prices.

Marvelous Sanni, a resident of Lokoja, recounts how a bag of sachet water, once priced at N200, now sells for N400 to N500.

Families like hers have been compelled to turn to borehole water, raising questions about sanitation and health risks.

The situation is dire for households like that of Margret Danjuma in Abuja, who can no longer afford the daily consumption of sachet water.

Resorting to purchasing water from boreholes, Danjuma reflects the broader struggle faced by many Nigerians in securing clean and affordable drinking water amidst economic turmoil.

Local businesses, too, feel the pinch, with some restaurants discontinuing the provision of water to customers or resorting to unconventional methods like selling water in nylon bags.

The Association of Pure Water Producers attributes the price surge to rising production costs, including the cost of materials and treatment.

Experts and consumer protection agencies express concern over the unjustifiable price hikes, attributing them to greed and cartel-like behavior within the industry.

Calls for government intervention to regulate prices and ensure affordability resonate amid the growing hardship faced by Nigerians nationwide.

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Economy

Port Harcourt Refinery Receives Over 450,000 Barrels of Oil – Mele Kyari

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NNPC - Investors King

The Nigerian National Petroleum Corporation Limited (NNPC) has announced a significant milestone in the rehabilitation of the Port Harcourt refinery, with over 450,000 barrels of oil already stocked into the facility.

Mele Kyari, the Group Managing Director of NNPC, disclosed this development during a press briefing after appearing before a Senate Ad-hoc Committee investigating the various Turn Around Maintenance projects of the country’s refineries.

Kyari’s revelation underscores the progress made in the rehabilitation efforts of the Port Harcourt refinery, which has been undergoing mechanical works alongside the Warri and Kaduna refineries.

The influx of crude oil into the Port Harcourt facility signals a crucial step towards its operational revival, following years of underperformance and neglect.

Addressing the Senate committee, Kyari reiterated NNPC’s commitment to fulfilling its promises regarding the refinery rehabilitation projects.

He emphasized the importance of regulatory compliance testing before commencing operations, assuring stakeholders that the Port Harcourt refinery is poised to restart operations within the next two weeks.

The news of the refinery receiving a substantial volume of oil injects optimism into the Nigerian energy sector, highlighting the potential for increased domestic refining capacity and reduced dependence on imported petroleum products.

It also aligns with the government’s broader agenda of revitalizing the country’s oil and gas industry to drive economic growth and self-sufficiency.

As the Port Harcourt refinery gears up for a potential restart, attention now turns to the forthcoming regulatory compliance tests and operational readiness assessments.

The successful revival of the refinery holds the promise of not only bolstering Nigeria’s energy security but also stimulating broader economic development and job creation initiatives.

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Economy

CBN Governor Transfers N100bn Worth of Fertilisers to Agriculture Ministry for Food Security Enhancement

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The Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, handed over N100 billion worth of fertilisers to the Federal Ministry of Agriculture and Food Security.

The ceremonial handover took place at the ministry’s headquarters in Abuja, where the Minister of Agriculture and Food Security, Abubakar Kyari, received the substantial contribution.

During the handing over ceremony, Governor Cardoso emphasized the CBN’s commitment to maintaining price stability, identifying the cost of food as a critical component of inflation.

He noted that addressing food inflation is pivotal due to the significant portion of household expenditure allocated to food and non-alcoholic beverages in Nigeria.

Despite the implementation of various measures by the CBN to curb inflation, the inflationary pressures remain largely driven by escalating food prices.

Cardoso acknowledged the challenges posed by transient inflationary pressures but expressed optimism about substantial alleviation by the third quarter of 2024.

The collaboration between the CBN and the Ministry of Agriculture aims to mitigate the surge in food prices by enhancing food productivity and security.

In alignment with its strategic shift, the CBN veered away from direct quasi-fiscal interventions and transitioned towards leveraging conventional monetary policy tools to execute monetary policies.

As part of this strategy, the CBN announced the allocation of 2.15 million bags of fertiliser valued at over N100 billion to support the Ministry of Agriculture in its efforts to enhance food productivity and security.

Minister Kyari praised the CBN for providing fertilisers, emphasizing their significance as the majority cost value in agricultural production inputs.

He highlighted the challenges faced by the agriculture sector due to various factors, including the COVID-19 pandemic, flooding, climate change, and the naira redesign policy.

However, Kyari expressed optimism about mitigating these challenges and reiterated the importance of fertilisers in agricultural production.

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