NNPC’s ‘secret’ subsidy bill set to soar as petrol landing cost hits N1,117/litre
The Nigerian National Petroleum Company (NNPC) is facing a surge in its ‘secret’ subsidy bill due to rising petrol landing costs, which have increased to N1,117 per litre from N720 in October 2023.
This significant jump is attributed to the market exchange rate of N1,610 per dollar, which has driven up the cost of importing petrol, including international prices, shipping, insurance, and other charges.
Experts warn that the escalating subsidy bill could further strain Nigeria’s finances, with Bello Rabiu, former NNPC chief operating officer for upstream, noting that “lack of transparency in the pricing and importation process has led to significant revenue leakages and potential hidden subsidies”.
Rabiu emphasized the need for a clear, competitive framework in the market, citing inefficiencies and high costs due to the current regulatory environment. He stressed that regulation is essential for Premium Motor Spirit (PMS) due to its significant role in the downstream sector.
Rabiu further argued that liberalizing the market – making all refineries and pipeline works operational – is crucial for an efficient oil and gas sector. He criticized the NNPC’s monopoly as the sole supplier, saying, “We are yet to see the supposedly gone subsidy… the country is still bleeding.”
Wumi Iledare, Professor of Energy Economics, also expressed concerns about the pricing disparity between diesel and petrol in Nigeria, stating, “The gap between the cost of diesel and petrol in Nigeria is much… That means something is wrong.”
Iledare added, “I don’t know if the NNPC is paying subsidies or not, but somebody is absorbing the difference. You can call it under-recovery or subsidy, but the price of petrol today does not reflect the market cost of producing a litre of petrol.”
