Rising landing costs for petrol are set to send the Nigerian National Petroleum Company (NNPC) ‘secret’ subsidy bill rocketing, threatening to exacerbate the already precarious economic situation of Africa’s largest oil producer, BusinessDay’s findings have revealed.
At the black-market rate of N1,610 per dollar, findings showed the landing cost of petrol, which includes the product’s international price, shipping, insurance, and other charges, increased to N1,117/litre from N720/litre in October 2023.
This means that the bill for subsidies, which has been kept under wraps, will jump, piling pressure on the national oil company’s finances.
The Nigerian government projects N5.4 trillion in 2024 for petrol subsidies as against N3.6 trillion budgeted for the same intervention in 2023, Wale Edun, finance minister, said recently.
But with the landing cost rising to N1,117/ litre, the subsidy payment could further rise, gnawing Nigeria’s finances via the NNPC.
“Lack of transparency in the pricing and importation process has led to significant revenue leakages and potential hidden subsidies,” Bello Rabiu, independent consultant and former NNPC’s chief operating officer for upstream, said at a virtual event.
He noted that the market lacks a clear, competitive framework, resulting in inefficiencies and high costs.
Rabiu emphasised that PMS is the only regulated product, stressing that the regulation is essential due to its significant role in the downstream sector.
According to Rabiu, “To achieve an efficient oil and gas sector across upstream, midstream, and downstream systems, the market must be liberalised, with all refineries and pipeline works operational.”
He noted that the NNPC is running a monopoly as the only supplier, a dominant player in the sector.
Rabiu lamented that the country is still bleeding because the exact amount paid as a subsidy remains unknown.
He said, “We are yet to see the supposedly gone subsidy
