Nigeria Is Spending More On Fuel Subsidy Despite Global Price Crash

January 27, 2015 Felicia Omari Ochelle Business, Energy, Finance/Money

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VENTURES AFRICA – With almost everything related to oil presently being accompanied by the word “fall”, it is hard to envisage a country spending more to provide cheaper fuel for its citizens, but that is exactly with Africa’s biggest oil producing country, Nigeria.
A week after Nigeria announced a reduction in the fuel price of petrol by N10 – from N97 to N87 per litre – subsidy on the product has reportedly increased to N3.64. This increase from the N2.84 stated earlier in the month was obtained from the Petroleum Products Pricing Regulatory Agency (PPPRA).
local business blog, Nairametrics, also reported that according to the
most recent petrol pricing template, the Expected Open Market Price of Premium Motor Spirit, also known as petrol, will hit N90.64 per litre before the end of the month, up from N89.8 on January 16.
A breakdown of these figures implies that the government is picking up N3.64 of every litre of fuel purchased in Nigeria. This will only apply if the government persist at pegging the price at N87.
The landing cost, which is the sum of the product cost, trader’s margin, freight fees, lightering expenses, Nigerian Ports Authority fees, jetty depot thoughput charge, financing cost and storage charge has also risen to N75.15 per litre. However, the reason for this rise from the previous total of N74.35 recorded on January 16 was not disclosed.
Nigeria joins Tanzania and South Africa, and seven more African countries in slashing petrol prices. Other countries that have reduced fuel prices at retail level include China, Vietnam, Pakistan, India, United Kingdom, among others.