The Petroleum Products Pricing Regulatory Agency has revealed that the Federal Government has to pay about N1.2bn as subsidy on fuel imported into Nigeria in the last two days.
The subsidy on petrol that the Federal Government will pay has been increasing after it reduced the price of the product by N10 per litre on January 18, 2015.
The PPPRA, in its template on February 19, stated that the Expected Open Market Price for petrol, which is the summation of the landing cost plus the subtotal margins, was N101.50, as against the approved retail price of N87 per litre.
This revealed that the government will pay about N14.5 as subsidy on every litre of petrol.
Nigerians consume an average of 40 million litres of petrol daily according to figures from the NNPC.
The Executive Secretary, PPPRA, Mr. Farouk Ahmed said “Most people do not understand this because there is that time lag. The subsidy of yesterday for example, will be paid to somebody who loaded a cargo yesterday, and it arrives in 35 to 40 days. So, the product we are enjoying now is what somebody imported 35 or 40 days ago.
“And that is why people say if crude oil has come down, why are we not seeing commensurate reduction. No, because the cost price is still the same cost price in terms of some of the products that are deregulated. And for the case of PMS, which is regulated, government still absorbs that cost on behalf of Nigerians.”