Nigeria’s downstream petroleum industry may have gone into a frenzy, following clear indications that the Federal Government may no longer sustain the cost of under-recovery, otherwise known as subsidy, due to a the steady rise in petrol import bills..
Industry operators told
Vanguard yesterday that it is now clear that pump price may be officially
raised soon to enable the government, through the Nigerian National Petroleum
Company Limited, NNPCL, to generate enough funds to settle its outstanding
bills on products received on credit supply by several international dealers.
Consequently, they speculated
that a compromise pump price of N1,000 per litre or more may be underway,
though some of them quoted the landing cost of the product at about N1,200 per
litre, excluding the cost of delivery to petrol stations.
Presently, NNPCL, according to
the dealers, is no longer getting adequate supply to meet the nation’s needs, a
situation which has worsened the product scarcity in the past one week while
imposing excruciating pains on the transportation sector and the entire
citizenry.
The shortage in supply, they
further explained, was because some of the suppliers are no longer willing to
deliver the product on credit. They also said that more of the products are now
being smuggled out of the country.
The current transactional
analysis obtained by Vanguard, yesterday, put the landing cost, including
product cost, finance cost, freight, port charges, insurance, storage and the
Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA at
N1,205.52 per litre.
However, when the
transportation cost, marketers’ margins and dues were added, the estimated
official pump cost of the product rose to N1,405 per litre.
This indicates that at the
proposed N1,000/ltr, under-recovery (subsidy) would still be significantly
high, a situation which they said has put the government in a dilemma of
choosing between full cost recovery (total elimination of subsidy) or a
compromise position of splitting the cost between government and final
consumers in a N1,000/ltr pump price.
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