The Nigerian National Petroleum Corporation (NNPC) Limited has stated that Nigeria needs an estimated N6 trillion for fuel subsidies yearly.
Mele Kyari, the Chief Executive Officer of NNPC, expatiating on the budget said, it presently costs N371.3 per liter to import fuel, which is given to oil marketers companies at a subsidized rate of N118 per liter.
He said the difference between N118 and N371.3, which is N253.3 per liter is all on the government.
Kyari said, “For instance, today if you go to the market today to import petroleum, you will be importing at N371.3, while we are transferring to oil marketing companies at N118 to a liter so that they will be able to sell at N165 or N170 at the pump. There is no other way of doing it.
“That means the difference between N118 and N371 is the burden carried by the government, it is not carried by the market and a simple number around this will tell you that we need about N6 trillion every year minimum to cover this gap at the current market condition,” he added.
In the first half of this year, the International Monetary Fund (IMF) raised concerns about the subsidy budget saying that if oil prices continued to rise and urgent measures are not taken, the subsidy fee could surpass N6 trillion.
The IMF Resident Representative for Nigeria, Ari Aisen, said as an oil exporter he is worried that Nigeria is failing at taking advantage of the current increased oil prices to build the country’s reserves. However, he was hopeful about the Dangote Refinery, which he believes would reduce fuel imports and the burden of fuel subsidy when it resumes operation.
According to Zarma Mustapha, the Deputy National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), the cost of petrol in Nigeria is the cheapest in the world, and this is because of the subsidy, he said this huge subsidy expenses by the government through NNPC is becoming unsustainable.