There are indications that the landing cost of Premium Motor Spirit, PMS, otherwise known as petrol rose year-on-year, YoY, by 46.8 per cent to N1,026.71 per litre in May 2024, from N545.83 per litre, recorded in the corresponding period of 2023.
The landing cost excludes other additional costs which include deport-related charges, transportation logistics and marketers’ margin, which would combine to bring delivery at filling stations at nearly N1,052.39/litre, at an Exchange rate of N1,510 to a dollar (a differential of N458.71 per litre).
This is contrary to claims by the federal government that the Bola Tinubu administration has scrapped subsidies on petrol.
Sources around oil marketers told Energy Vanguard that the landing cost for June is expected to rise further as the factors that propelled the rise in May figures have worsened as of last week.
Giving further insight, they said foreign exchange has been a major concern where scarcity has persisted while the exchange rate has also continued to deteriorate.
The marketers also noted that the cost of fuel import is rising in response to the recent rises in the price of crude oil in the international market
A transactional analysis of a major operator, sighted by Vanguard yesterday showed that marketers were paying N1,052.39 per litre as total direct cost.
A breakdown shows product cost per litre at N1,026.71, freight (Lome-Lagos) at N10.37, port charges at N7.37, NMDPRA levy of N4.47, storage cost at N2.58, Marine insurance cost at N0.47, fendering cost at N0.36 and ”others” at N0.06 as well as a finance cost amounting to N28.04.
Specifically, the transactional analysis put the landing cost of 28,000 metric tons of imported petrol at over $25 million, including total product cost, total direct cost, and total finance cost, capable of generating more than N39 billion as sales revenue, indicating a loss of over N19 billion.
As a result of this development, the marketers said it would be unprofitable to import at the current pump price, while the government has not guaranteed a free float of pump prices.
Consequently, the Nigerian National Petroleum Company Limited, NNPCL, has remained the only importer of the product.
The situation appears to be worsening as Nigerians are forced to struggle with the cost of living as a hike in transportation has resulted in an increase in goods and services across the country.
Fuel price rises by 176.02% to N701.24 per litre – NBS
The National Bureau of Statistics, NBS, latest report on the national average retail price of petrol saw an increase year-on-year, YoY, by 176.02 per cent to N701.24 per litre in April 2024 from N254.06 per litre recorded in the corresponding period of 2023.
On a month-on-month, MoM, basis, an increase of 0.64 per cent was recorded from N696.79 per litre in March 2024.
Experts give insight
Commenting on the oil price situation, Managing Director/CEO of Pinnacle Oil, Mr Robert Dickerman, disclosed that Nigeria is currently paying about N1 trillion monthly as a petrol subsidy.
He said there is still a massive subsidy, which explains why the product remains cheap, thus encouraging smuggling to neighbouring countries.
He added: “The consequences of this subsidy are: the cost of gasoline in Nigeria is the lowest in Africa by far, which encourages smuggling out, further depriving Nigeria of value. Smuggling causes Nigeria to subsidize neighbouring countries even while our economy struggles. The cost is hurting the entire budget, federal and state, as critical programs cannot be funded to pay this subsidy. It is currently calculated to be about 1 trillion Naira/month.”
Market volatility discourages importation, investment – IMF
The International Monetary Fund, IMF, has said the Nigerian government has, through the backdoor, resumed the payment of subsidies on the premium motor spirit, PMS, otherwise known as petrol.
The IMF stated the conclusion of its Executive Board’s Post Financing Assessment with Nigeria, and it expressed concerns that the government had capped the prices of fuel at retail stations.
The global lender advised the administration of President Tinubu to completely stop the payment of subsidies on petrol to free funds to run the government, adding that the subsidy regime was robbing the poor for the rich.
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