The Petroleum Products Pricing Regulatory Agency (PPPRA) revealed that federal government subsidy on fuel has risen to N2.4 billion daily in May, from N774 million in March, 2018, also as a result of the high price of crude oil in the international market. This means Nigeria may not benefit from oil price increase as chunk of its oil proceeds goes into subsidy. Price of petrol could have been as high as N205 per litre in the domestic market. PPPRA made it known that the price of the commodity appreciated by 8.47 per cent from N189 per litre recorded in April 25, 2018 to N205 per litre as at May 16, 2018.
The regulatory agency disclosed that between May 11 and May 16, 2018, oil prices continued to soar, stating that the average price for Brent Dated was $77.92 per barrel; Nigeria’s Bonny Light was $78.08 while West Texas Intermediate, WTI, was $60.27 per barrel.
The price of crude oil hovered at $66 per barrel and between $75 and $80 per barrel since May has jerked up landing cost of the refined product in the domestic markets for finished product importers like Nigeria.
Price of Premium Motor Spirit (PMS) is still fixed at a maximum of N145 per litre while the Nigerian National Petroleum Corporation (NNPC) is currently paying N60 as under recovery for a litre of PMS.
Reacting to the recent trend, the Group General Manager, Group Public Affairs Division of the NNPC, Mr. Ndu Ughamadu was of the view that “The explanation is simple. The higher the price of crude oil, the higher the price of petroleum products in the international market. It should also be noted that this has also impacted on the landing cost, and by extension our under recovery.”
It was also gathered that the situation is worsened by smuggling especially in border communities, as NNPC is being compelled to subsidize the product for neighboring countries.
Group Managing Director of the NNPC, Dr Maikanti Baru who led top management team of the corporation to visit Comptroller-General of Nigeria Customs Service, Col. Hameed Ali (retd), recently, had blamed the increase in fuel consumption on massive smuggling of petroleum products to neighbouring countries.
Baru had raised the alarm on proliferation of fuel stations in communities with international land and coastal borders across the country, insisting that the development had propelled unprecedented cross-border smuggling of petrol to neighbouring countries, making it difficult to sanitise the fuel supply and distribution matrix in the country.
The NNPC boss maintained that detailed study conducted by the corporation indicated strong correlation between the presence of the frontier stations and the activities of fuel smuggling syndicates. Providing a detailed presentation of the findings, Baru noted that 16 states, having among them 61 local government areas with border communities, account for 2,201 registered fuel stations.
According to him, “NNPC is concerned that continued cross-border smuggling of petrol will deny Nigerians the benefit of the Federal Government’s benevolence of keeping a fix retail price of N145 per litre, despite the increase in PMS open market price above N171 per litre.”
Responding, Customs’ Comptroller-General had said the service would work with the NNPC to stem the tide of cross-border smuggling of petroleum products, noting that all hands must be on deck to ensure the economic survival of the country.
Downstream operators believed that the ugly trend of smuggling in the country is an aged long issue that has thrived through collaboration between security agencies and their cohorts. They see themselves as partners in progress since proceeds are shared after every successful smuggling of PMS in and out of the country. Only dedicated and committed personnel can stem the tide of the menace.