Business

Fuel Subsidy Hits N1.593tn, Refinery Rehabilitation Gulps N54.66bn

Published

3 years ago

August 16, 2022

Latest data on the amount spent in subsidising Premium Motor Spirit, popularly called petrol, seen in Abuja on Monday showed that the government subsidised the commodity with N1.593tn between January and June 2022.

It was also gathered that the Nigerian National Petroleum Company Limited pumped N54.66bn into refinery rehabilitation during the six months period.

Figures obtained from the NNPCL’s presentation to the Federation Accounts Allocation Committee meeting for July 2022 showed that subsidies on petrol were implemented in June. The company transited from a public oil firm to a commercial entity last month.

It also made it clear in July that subsidy on petrol was now a burden of the Federal Government and not its own responsibility.

An analysis of the July presentation to FAAC showed that fuel subsidy or under-recovery/value shortfall, as described by NNPCL, rose to N1.593tn in the first half of 2022.

Figures from the report indicated that the amounts spent as subsidy on the commodity in January, February and March were N210.38bn, N219.78bn and N245.77bn, respectively.

A total of N271.59bn, N327.1bn and N319.18bn were spent as subsidy in April, May and June respectively.

On refinery rehabilitation, the oil company spent N9.11bn in January, made no expense in February and March. It invested another N9.11bn on the facility.

It spent N9.11bn in each of the months of April and May 2022 on refinery rehabilitation, while investing N18.22bn on the plant in June.

In April this year, the Minister of State for Petroleum Resources, Chief Timipre Sylva, said the April 2023 completion date for the rehabilitation of the Port Harcourt refinery was feasible and that the plant would refine 60,000 barrels of crude by early next year.

“This project kicked off second quarter last year and where they are now is quite impressive. It is on schedule. The commitment is to deliver 60,000 barrels per day from this refinery by the first quarter of next year, and, of course, we are quite happy,” Sylva had stated while inspecting the facility.

The NNPC officially signed the contract with Tecnimont SPA for the $1.5bn rehabilitation programme of the Port Harcourt Refining Company in April 2021 and had promised that the facility would be completed in 18 months.

Meanwhile the company’s July presentation to FAAC stated that the sum of N391.529bn was the gross domestic crude oil and gas revenue for the month of June 2022.

It noted that the value shortfall on the importation of PMS recovered from June 2022 proceeds was N319.176bn while the outstanding balance carried forward was N1.01tn.

“The estimated value shortfall of N1,490,413,402,007.66 (consisting arrears of N479,688,823,026.00 plus estimated June 2022 value shortfall of N1,010,724,578,981.66) is to be recovered from July 2022 proceed due for sharing at the August 2022 FAAC meeting,” the company stated.

The Chief Executive Officer, NNPCL, Mele Kyari, had during the unveiling of the newly commercialised oil firm, stated that the company was now a private outfit and had nothing to do with FAAC anymore.

Responding to a question on what would happen to NNPC’s monthly FAAC contributions, kyari replied, “We are now a private company. Would MTN go to FAAC?”

When probed further to tell if there would be no more FAAC remittances from the company going forward, he said, “We will pay our taxes, royalties and deliver dividends to our shareholders.”

Asked about the arrears to FAAC that were not delivered by the firm over the years, the CEO said, “Which arrears? That’s Nigerian National Petroleum Corporation.”’

On how the oil firm would handle subsidy on petrol being a commercial entity, Kyari replied that fuel subsidy was not a burden of NNPC.

The CEO had said, “Subsidy is not NNPC’s burden. Subsidy is the decision of the state and in every jurisdiction anywhere in the world, countries see them differently. In some countries, they put petroleum tax on top of the market price of these products.

“So, when decisions are to be made in some jurisdictions, they will reduce the level of taxation. That also is another form of subsidy. In some countries, you have zero taxation but you will pay the market price for the commodity. That also in a way, in fiscal system, looks at it from a subsidy point of view.

“In very many countries, a leader can decide that I don’t even want my countrymen to buy it at the market price. I’m ready to reduce that price for them so that they can buy.”

Kyari added, “In either case, whichever way the decision and the policy of the state decides, you know NNPC is there in the space to provide the product to the state at commercial value and, of course, it is also our duty to deliver to the customer at the price that the state wants.

“So it is no longer an NNPC issue. NNPC will have no issue with this. NNPC will be happy to supply because we will now see the state as our customer.”

Subsidy on petrol has remained an issue of concern among Nigerians and international agencies, as its humongous cost has continued to drain the treasury of the Federal Government.

PUNCH.

Business

JUST IN: Dangote Refinery Hikes Petrol Ex-depot Price

Published

7 days ago

June 20, 2025

Editor

Nigerians may soon pay more for petrol as the Dangote Petroleum Refinery on Friday increased its ex-depot price for Premium Motor Spirit to N880 per litre, raising fresh concerns over fuel affordability and price volatility in the downstream sector.

Checks on petroleumprice.ng, a platform tracking daily product prices, and a Pro Forma Invoice seen by The PUNCH confirmed the hike, representing a N55 increase from the previous rate of N825 per litre.

The increment would ripple across the entire fuel distribution chain, likely pushing pump prices above N900/litre in some parts of the country, especially in areas far from the distribution hubs.

The hike comes despite global crude prices falling. Brent crude dipped by 3.02% to $76.47, WTI fell to $74.93, and Murban dropped to $76.97 on Friday. The decline in benchmarks offers little relief due to persistent fears of sudden supply disruptions.

The refinery has increased its reliance on imported U.S. crude and operational costs amid exchange rate instability, which adds to its pricing pressure.

On Thursday, the President of the Dangote Group, Aliko Dangote, said his 650,000-barrel capacity refinery is “increasingly” relying on the United States for crude oil.

This came as findings showed that the Dangote Petroleum Refinery is projected to import a total of 17.65 million barrels of crude oil between April and July 2025, beginning with about 3.65 million barrels already delivered in the past two months, amid ongoing allocations under the Federal Government’s naira-for-crude policy.

Dangote informed the Technical Committee of the One-Stop Shop for the sale of crude and refined products in naira initiative that the refinery was still battling crude shortages, which had led it to resort to imports from the United States.

On Monday, the president of the Petroleum and Natural Gas Senior Staff Association of Nigeria, Festus Osifo, accused oil marketers of exploiting Nigerians through inflated petrol prices, insisting that the current pump price of PMS should range between N700 and N750 per litre.

He criticised the disparity between falling global crude oil prices and the stagnant retail price of petrol in Nigeria.

“If you go online and check the PLAT cost per cubic metre of PMS, convert that to litres and then to our Naira, you will see that with crude at around $60 per barrel, petrol should be retailing between N700 and N750 per litre.”

He asserted that if Nigerians bear the brunt of higher fuel costs, they should be allowed to enjoy the benefit of low pricing.

His forecast of increased costs now appears spot on, considering the latest developments.

Marketers are already adjusting. Depot owners and fuel distributors in Lagos and other cities anticipate a domino effect, with new price bands expected to follow Dangote’s lead.

Many had held back pricing decisions since Tuesday, when the refinery halted sales and withheld fresh PFIs. The delay fueled speculation, allowing opportunistic price hikes across various depots.

Business

Naira Appreciates At Official Market

Published

1 month ago

May 24, 2025

Editor

The Naira, which has seen steady appreciation against the Dollar all week, closed stronger on Friday, trading at ₦1,580.44 in the official forex market.

Data from the Central Bank of Nigeria’s website show the Naira gained ₦4.51k against the Dollar on Friday alone.

This marks a 0.28 per cent appreciation from Thursday’s closing rate of ₦1,584.95 in the official foreign exchange window.

The local currency maintained consistent strength throughout the week, recording gains daily.

On Monday, May 19, it traded at ₦1,598.68; on Tuesday, at ₦1,590.45; and on Wednesday, at ₦1,584.49.

These gains suggest increased investor confidence and improved forex supply, contributing to the naira’s performance.

Meanwhile, the CBN, at its 300th Monetary Policy Committee meeting held Monday and Tuesday, retained the Monetary Policy Rate at 27.5 per cent.

Business

BREAKING: Again, Dangote Refinery Cuts Petrol Price

Published

1 month ago

May 22, 2025

Editor

The Dangote Petroleum Refinery has announced a nationwide reduction in the pump price of Premium Motor Spirit (PMS), commonly known as petrol, with new prices now ranging between ₦875 and ₦905 per litre, depending on location.

The ₦15 per litre cut applies across all regions and partner fuel stations, and was confirmed via an official announcement posted on Dangote Refinery’s social media channels on Thursday.

Major marketers participating in the new pricing regime include MRS, Ardova, Heyden, Optima Energy, Techno Oil, and Hyde Energy — partners in the distribution of Dangote-refined products.

Under the previous pricing structure, Lagos residents paid ₦890 per litre, while prices reached ₦920 in the North-East and South-South regions. With the latest adjustment, Lagos now pays ₦875 per litre, while the North-East and South-South will see prices drop to ₦905.

A regional breakdown of the revised prices is as follows: Lagos: ₦875, South-West: ₦885, North-West & Central: ₦895, North-East & South-South: ₦905 and South-East: ₦905.

In its announcement, Dangote Refinery encouraged consumers to purchase fuel only from authorised partner stations and urged the public to report any cases of non-compliance via its official hotlines: +234 707 470 2099 and +234 707 470 2100.

“Our quality petrol and diesel are refined for better engine performance and are environmentally friendly,” the company said.