Nigeria’s petrol subsidy has surged to N907.5 billion monthly, surpassing the levels seen before President Bola Tinubu’s decision to halt the costly practice last May.
Analysis indicates that the country’s subsidy on premium motor spirit (PMS), commonly known as petrol, has skyrocketed due to the prevailing foreign exchange crisis, which has driven the actual cost of a liter of fuel to N1,203.
Just a week before the 2023 presidential election, Mele Kyari, the Group CEO of the Nigerian National Petroleum Company (NNPC) Limited, disclosed that Nigeria was spending over N400 billion monthly on petrol subsidy.
However, recent investigations into the country’s petrol pricing dynamics have revealed a significant spike in the landing cost of petrol, attributed to the escalating black-market exchange rate.
At the prevailing black-market rate of N1,500 per dollar, the landing cost of petrol has surged to N1,009 per liter, marking a substantial increase from N720 per liter recorded in October 2023.
Despite the passing of the Petroleum Industry Act 2021 and the deregulation of the downstream sector, the state-owned NNPC remains the sole importer of petrol into Nigeria, due to challenges in accessing forex required for importation.
More than 90 licensed marketers tasked with importing petroleum products into Nigeria find themselves unable to bring in any products due to unresolved price differentials.
Jide Pratt, country manager of TradeGrid, emphasized the need for marketers to access forex to import the refined product into Nigeria.
However, with NNPC still dominating the importation scene, the subsidy burden continues to mount, with the country grappling with the consequences of a significant surge in petrol prices and forex shortages.
