Don't Miss


Home   >   Business   >   Industries   >   Energy   >   Buhari’s government incurs N57bn petrol subsidy debt

Buhari’s government incurs N57bn petrol subsidy debt

By on June 29, 2015

The Federal Government has incurred a total sum of N56.784bn in petrol subsidy arrears since Muhammadu Buhari took over as President of the country on May 29, this year.

According to data from the Petroleum Products Pricing Regulatory Agency, obtained from the agency’s website on Friday, the country is said to be incurring petrol subsidy arrears to the tune of N47.32 per day on one litre of petrol.

Between May 29 and now, the current government has spent 30 days in office.

Based on a daily petrol consumption figure of 40 million litres, a figure supplied by the Pipelines and Products Marketing Company, the total subsidy cost on the product for the 30 days the Buhari government has been in power amounts to N56.784bn at N47.32 per litre.

The current PPPRA figures put the total cost of Premium Motor Spirit (petrol) at N134.32 per litre, of which N118.83 is the landing cost while N15.49 is the sub-total of the margins.

According to the PPPRA, the cost of a litre of petrol with freight is N106.85; traders’ margin, N1.47; lightering expenses, N4.19; the Nigerian Ports Authority rate, N0.77; financing, N1.75; jetty depot thru’put charge, N0.80; and storage cost, N3.00.

For the distribution margins, retailers are entitled to N4.60 per litre of petrol; transporters, N2.99; dealers, N1.75; bridging fund, N5.85; marine transport average, N0.15; and administrative charge, N0.15.

For the period under review, only the Nigerian National Petroleum Corporation is said to be importing petrol because members of the Major Oil Marketers Association of Nigeria have refused to import owing to subsidy arrears owed them by the Federal Government.

Oil marketers had on June 3 this year said they were still being owed over N291bn subsidy claims.

They also denied being saboteurs on account of the petrol scarcity, which recently hit Nigerians and the nation’s economy.

Then, the Executive Secretary, Depot and Petroleum Products Marketers Association, Mr. Olufemi Adewole, was quoted as saying, “It has become necessary to state the fact that depot owners and other fuel importers under the ‘petroleum support fund scheme’ are still being owed billions of naira in subsidy reimbursement, interest on delayed payment and foreign exchange differentials.”

Adewole said the former Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, had accused the association and a sister union of sabotage in her letter to them, a copy of which she reportedly released to the Senate for reference.

He, however, said the letter did not state the timeline for the re-verification exercise which the minister instituted on the amount she disputed.

It also did not state the expected date of payment, which the ‘PSF’ participants had been clamouring for in all the meetings held with Okonjo-Iweala since February 2015.

“It would be injustice against participants in the ‘PSF scheme’ who actually render a social service to the nation by importing petrol at international rate and sell below cost price at the behest of the Federal Government to be labelled as saboteurs. This is just because they asked to be refunded the difference between the landing cost of the imported petrol and the local selling price in line with the agreed conditions of participation,” Adewole said.

Meanwhile, the transition committee set up by President Muhammadu Buhari shortly after he was declared the winner of the March 28 presidential election had advised him to end the fuel subsidy programme and privatise the nation’s four refineries.

Sources in the All Progressives Congress, were said to have revealed the recommendation to Reuters some days ago.

Nigeria, which is Africa’s top oil producer and biggest economy, heavily subsidises petrol and kerosene consumption and relies on imports for the bulk of its domestic demand due to an under-performing refining system.

The subsidy regime, which was said to have handed out more than N1tn in fraudulent claims to oil marketers in 2012, is proving to be increasingly costly.

Buhari is said to be considering the recommendations made in the strategy report produced by the 19-member committee led by Ahmed Joda.

 

[Punch]