…As oil price hits $45
By Adewale Sanyaolu
FROM a daily subsidy payment of N232 million per day two weeks ago, subsidy on petrol, Monday rose to N364 million, updated pricing template of the Petroleum Pricing Regulatory Agency (PPPRA) has shown.
This amount is payable by the Federal Government to cushion the shortfall in the expected open market price of petrol at N95.05 and the actual pump price of N86.00 and N86.50k respectively. The expected open market price is landing cost plus margin.
According PPPRA template for petrol posted on its website, the expected open market price was pegged at N95.09 meaning a shortfall of N9.05 per litre of petrol is being subsidised by government.
Recall that Daily Sun had on April 4, 2016 reported the daily subsidy of N232 million per day. As at then, the expected open market price of petrol was pegged at N92.34k. But following Daily Sun’s publication, PPPRA had said there was no provision for fuel subsidy in the 2016 budget.
A statement from the acting Executive Secretary of PPPRA, Mrs. Sotonye Iyoyo, explained that that the funds from Over-Recovery in the first quarter (Q1) shall be duly utilised for whatever noticeable imbalance in April 2016 in line with the Price Modulation Principle (PMP).
Stakeholders are of the view that with expected open market price at N92.34k, government would be subsidising a litre with N5.80k. But rather than subsidise, PPPRA said what still exists is PMP, through which it considers and reviews pump price of petrol quarterly.
At N91.80k, government pays N5.80k on every litre of petrol at the retail price of N86.00 for Nigerian National Petroleum Corporation (NNPC) retail outlets and N86.50k for independent marketers.
The national daily consumption, according to NNPC, is 40 million litres a day. When multiplied by N9.05, it gives N363,600,000 per day.
Meanwhile, Brent crude hit a five-month high of $44.53 per barrel yesterday, after news filtered in that top producers, Russia and Saudi Arabia, have agreed to freeze output ahead of the much-anticipated producers’ meeting on Sunday.
Brent crude prices were up $1.70 or 4 per cent, at $44.53 a barrel by 1:45 pm EDT (1745 GMT). US crude was up $1.63 or 4.04 per cent, at $41.99 per barrel.