Due to a lack of local refining capacity, the Federal Government of Nigeria would spend roughly ₦1.35 trillion subsidising imported petrol between October this year and June 2022, when the finance minister said that the wasteful and opaque subsidy regime will come to an end.
According to the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Mele Kyari, the Federal Government spends as much as ₦140 to ₦150 billion to subsidise Premium Motor Spirit (petrol), monthly, a development opposed by the World Bank and other international lenders who have advised the government to channel such funds into other critical sectors of the economy.
According to Kyari, the open price of petrol has risen to ₦256 per litre, while the retail price is pegged at ₦162 per litre.
This implies that the government is subsidising the product by ₦94 per litre.
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He said: ‘If we are to sell at the market price today at current exchange rate, we will be selling the product at about ₦256 to a litre. What we sell today is ₦162, so the difference is at a cost to the nation.
‘The difference comes back to as much as ₦140 billion to ₦150 billion cost to the country monthly.
‘As long as the volume goes up, that money continues to increase and we have two sets of problems to face, the problem of supply and foreign exchange for the NNPC. We may not see foreign exchange cheque taking place for importation,’ he said at a recent television interview.
Using the higher band of ₦150 billion monthly subsidy payouts, it implies that the federal government has spent ₦1.35 trillion on petrol between January and September this year.
Experts insist that the country is bleeding heavily as it borrows to make petrol cheap and have amplified calls to ditch the subsidy regime as it only benefits the rich.
AFRICA DAILY NEWS, NEW YORK
