NNPC: Amount spent on PMS reached N947.51 billion between January and April

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Operators in the oil and gas sector, along with other stakeholders, have expressed concern over the continued increase in the amount spent on subsidizing Premium Motor Spirit, commonly known as petrol, which jumped to N947.51 billion between January and April 2022.

An analysis of data obtained Wednesday from the Nigerian National Petroleum Company Limited showed a monthly increase in PMS subsidy spending by the oil company, although the NNPC described it as an under-recovery/shortfall in value.

It was also found that the oil company had informed the Federation Accounts Allocation Committee that it would deduct an estimated value shortfall of N874.5 billion under the May 2022 procedure to be shared during of the June 2022 FAAC meeting.

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The President of the Nigerian Petroleum Retail Outlet Owners Association, Billy Gillis-Harry, explained that the true cost of petrol without subsidy was usually a bit higher than that of diesel.

He says that without subsidy, PMS would sell around N550-600/litre depending on the international cost of crude oil and currency fluctuations.

The approved subsidized pump price of PMS in Nigeria is between N162-165/litre, but oil traders have said the actual cost is expected to be a bit higher or about the same price of diesel if PMS had been deregulated.

In January, February, March and April, the oil company committed N210.38 billion, N219.78 billion, N245.77 billion and N271.58 billion respectively, while the total during the four-month period was N947.51 billion.

National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu noted. “It is unsustainable. In just four months, we have incurred so many gasoline subsidies due to our continued reliance on petroleum product imports.”

He added: “And it is because all our refineries are not yet operating despite several promises from the government that the factories will start producing. The value of the naira depreciates daily, so what do you expect?

“Nigeria will continue to subsidize petroleum products and it’s static at the moment and on that basis our naira will continue to be devalued as so many dollars are just being deployed to seek out products.”

On what could be done to remedy the situation, the IPMAN official replied, “Fixing the refineries is supposed to be our priority given the gains it would have on the economy and the country as a whole.

“The leaders of this country should encourage modular refineries in Nigeria. Second, even small-scale refineries should be encouraged to come and reinforce the moribund refineries that we have. Nigeria can even build a brand new refinery from scratch, that will help us.

The Executive Secretary of the Major Oil Marketers Association of Nigeria, Clement Isong, added that “it depends on how our exchange rate goes. It depends on the evolution of the price of oil. If we are lucky and things are on our side, it (the subsidy) could be less. But if things aren’t on our side, if you do the current math as of today, based on all the numbers for today, if things don’t improve, it can easily reach N6tn,” a- he declared.

Commenting on the development, a former president of the Association of National Accountants of Nigeria, Dr. Sam Nzekwe, said funds spent on petrol subsidies would have been used to address challenges in other sectors of the government. economy.

“That’s why we’ve been urging the government to fix our refineries and let us refine our crude here and save the forex used to import oil. We can’t keep spending so much on gasoline subsidies “, did he declare.

He added, “The value shortfall on import of PMS recovered from the April 2022 proceeds is N271,125,127,487.58, while the outstanding balance carried over is N371 billion.

“The estimated value gap of N874,503,649,663.98 billion (comprising arrears of N371 billion plus an estimated value gap as of April 2022 of N503,313,767,828.14) is to be recovered from May 2022, with product to be shared at the June 2022 FAAC meeting.”

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