The Major Energies Marketers Association of Nigeria (MEMAN) announced on Wednesday that as of Tuesday, July 16, 2024, the landing cost of Premium Motor Spirit (petrol) was N1,117 per litre.
MEMAN shared this information during a webinar with journalists, revealing that the landing cost of diesel stood at N1,157 per litre, and aviation fuel at N1,127 per litre.
The N1,117 landing cost of petrol significantly exceeds its current pump price in Nigeria. Presently, petrol stations operated by the Nigerian National Petroleum Company Limited (NNPC) and major marketers sell PMS at between N617 and N660 per litre, while independent marketers charge N700 or more per litre.
Although NNPC, the sole importer of petrol into Nigeria, has consistently denied subsidizing PMS, it has not disclosed the product’s landing cost. MEMAN’s disclosure is one of the first from industry marketers, as the landing cost has largely been kept secret by the importer.
Clement Isong, MEMAN’s Executive Secretary, stated that the costs were sourced from independent energy price benchmark providers. The association intends to regularly release similar information to keep the public informed.
Recently, independent oil marketers accused private depot owners of increasing the ex-depot price of petrol from N630 to N720 per litre.
Energy sector expert Prof. Wumi Iledare told our correspondent that the price of PMS in Nigeria is significantly below the international price, especially when compared to the price of diesel. “The gap between the cost of diesel and petrol in Nigeria is much. It is never like that all over the world. That means something is wrong. I don’t know if NNPC is paying subsidies or not, but somebody is absorbing the difference. You can call it under-recovery or subsidy, but the price of petrol today does not reflect the market cost of producing a litre of petrol,” he explained.
Iledare added that given the current exchange rate, the price of petrol should be no less than 80% of the price of diesel.
Echoing this sentiment, Adeola Adenikinju, a Professor of Economics at the University of Ibadan and President of the Nigerian Economics Society, stated, “The current price of PMS is being subsidised by the government. The government buys at higher rates and sells to us at subsidised rates. That is what they call under-recovery.”
The International Monetary Fund (IMF) recently urged the Nigerian government to eliminate implicit fuel and electricity subsidies, warning that these subsidies could consume 3% of the nation’s Gross Domestic Product in 2024, up from 1% the previous year. President Bola Tinubu announced the removal of fuel subsidies during his inauguration on May 29, 2023. However, the IMF noted that adequate compensatory measures for the poor were not promptly implemented and were subsequently paused due to corruption concerns. As a result, capping pump prices below cost reintroduced implicit subsidies by the end of 2023 to help Nigerians cope with high inflation and exchange rate depreciation.
Despite these observations, the NNPC and the Federal Government continue to deny subsidizing the current price of PMS.
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