The Minister of Information and National Orientation, Mohammed Idris said that importation of Premium Motor Spirit, or petrol, into Nigeria has decreased by 50% since the commodity’s subsidies were removed on Wednesday.
Economic Confidential reported that, President Bola Tinubu announced the elimination of gasoline subsidies in his inauguration speech on May 29, 2023. The Nigerian National Petroleum Company Limited, the country’s only importer of PMS, removed the fuel subsidy within a day of that announcement.
The commodity’s price increased as a result, going from around N198 per litre to over N500 per litre. It then increased to over N600 per litre and is presently sold for between N620 and N700 per litre, depending on the region of purchase.
The minister said that “the elimination of subsidies has resulted in a 50% decrease in gasoline imports during the third ministerial press briefing series in Abuja on Wednesday.
“Since the fuel subsidy was removed, the amount of petroleum imported has decreased by 50%,” the minister of information declared.
On February 18, 2023, around three months before to Tinubu’s removal of the PMS subsidy, Nigeria was using over 66 million litres of PMS per day, according to the Group Chief Executive Officer of NNPCL, Mele Kyari.
In addition, Kyari said that “at the time, PMS subsidies cost more than N400 billion a month, and he emphasized that this had a negative effect on NNPCL’s cash flow.
Despite the significant expense of fuel subsidies, NNPCL is Nigeria’s only importer of petrol and has been for a number of years.
The inability of other private oil marketers to get the cash needed to import PMS caused them to stop bringing petrol into Nigeria.
Kyari had declared, “There is a subsidy on the supply of petroleum products, particularly PMS imports into our country, today by law and the provisions of the Appropriations Act. Three days ago, the landing cost was around N315 per litre, according to current statistics.
“We are transferring to each of our consumers at N113 per litre, this indicates that for each litre of PMS that we import into our nation, there is a difference of around N202. When N202 is multiplied by 66.5 million litres and then multiplied by 30, the result is a monthly subsidy of more than N400 billion.”
Based on NNPCL data from February, the information minister’s most recent claim that gasoline imports had decreased by 50% suggests that the amount of imports into Nigeria has decreased by around 33 million litres per day.
This indicates a decrease in PMS imports of almost 990 million litres in a single month. One of our correspondents was informed by oil marketers that the ex-depot price of fuel, or the cost of the product from NNPCL, was around N585 per litre.
Due to the President’s elimination of the PMS subsidy, the government is presently saving around N19.3 billion per day and N579.1 billion every month, a decrease of 33 million litres.
The information disclosed by the minister’s may not be entirely false, as oil marketers have often claimed that the amount of petrol purchased has dropped significantly.
“The consumption of petrol has dropped to the lowest level ever, National President of the Natural Oil and Gas Suppliers Association of Nigeria, Bennet Korie, said. Petrol stations are closing because there is no longer any demand for their products.
“In the current business climate, marketers are fighting just to stay in business. People no longer purchase gas as they once did. As a result, the majority of petrol stations are closing because they are unable to turn a profit.”
Additionally, Korie warned that the more than 200 members of NOGASA would be compelled to resign from their positions due to the growing difficulty oil marketers were having finding the funds necessary to continue operating; this development resulted in the closure of 70% of downstream oil sector companies.
“The high borrowing rates offered by banks are another problem. You would need to pay N30m today to purchase one truck of PMS. You also know how much you will have to pay the bank in the name of inflation if you visit a bank to borrow N30 million at an interest rate of more than 30%.
“Because there is no other option, we will likewise stop providing our service if caution is not used. Since 70% of oil merchants have closed their doors, it is best that the government investigates this matter before things go out of control. Many of the operators come to us with grievances,” the speaker said.
