The federal government has resumed paying fuel subsidies. The amount is well over N12 naira for every liter of petrol. Recall that in January, Kachikwu and Buhari, both petroleum ministers had said Nigeria did not pay fuel subsidies for January.
The Petroleum Products Pricing Regulatory Agency (PPPRA) released a new pricing formula which shows that fuel subsidies paid by Buhari’s led ministry of petroleum will gradually increase over time. Their reason is that for oil marketers to keep importing the fuel, the Federal Government has to keep paying subsidies since crude oil price is still low.
We don’t understand the logic.
The restructured PPPRA pricing template for petrol shows that expected market price for rose to N99.38 per liter for oil marketers and N98.62 per liter at NNPC retail filling stations. According to PPPRA, the landing cost of petrol imported into the country is between N84.32 and N85.08 per liter respectively.
The Petroleum Pricing Regulatory Agency is the agency charged with the determination of the pricing of petroleum products. They regulate fuel prices and subsidy payments.
The Department of Petroleum Resources (DPR) is the agency responsible for petroleum regulation in Nigeria. DPR has the statutory responsibility of ensuring compliance to petroleum laws, regulations and guidelines in the Oil and Gas Industry.
The difference between the PPPRA determined prices and the government-regulated price yields the amount of subsidy per liter that the government incurs.
Recall that Kachikwu had accused fuel importers of diverting 30% of petrol to neighboring countries. For example, in Benin Republic, Fuel sells for more than 200 naira a liter. Thus marketers divert the already subsidized oil from Nigeria to neighboring countries leaving us in want of the product and making huge profit in the illegal deal.
We just hope the Buhari led administration, the NNPC, PPPRA, DPR, fuel importers and the rest of them know what they are doing. Nigerians are already suffering and they should rather tell us the exact situation in our oil sector than oscillate between opinions every week.