… As NNPC recorded N144.5bn Fuel Subsidy under-recovery in 2017
The Naira commenced the week with a 10 kobo depreciation to N360.51 per dollar, in the Investors and Exporters (I&E) window of the foreign exchange market. Data from the Financial Market Dealers Quote (FMDQ) showed that the indicative exchange rate for the I&E window rose to N360.51per dollar, yesterday, from N360.41per dollar on Friday last week, translating to a 10 kobo loss in the naira.
This depreciation was in spite of the 112 per cent increase in the volume of dollars traded in the I&E window. The window yesterday recorded turnover of$362.52 million, up from $170.61 million recorded Friday last week.
Vanguard investigation revealed that naira, yesterday, appreciated by N1 to N362 per dollar, after two weeks of relative stability at N363 per dollar in the parallel market.
In the meantime, the Nigerian National Petroleum Corporation, NNPC, said that it spent N144.53 billion in subsidising premium motor spirit, PMS, also known as petrol in 2017, translating to an average of N366 million per day.
NNPC In its Monthly Financial and Operations Report for December 2017 released recently, the NNPC stated that the amount spent on subsidy represented 16.85 per cent of the N857.36 billion remitted to the Federation account in the whole of 2017.
However, the NNPC described the subsidy as under recovery, which is a situation whereby it is incurring the cost of the differential between the official pump price of petrol and the actual cost of the commodity, especially as presently, the official price is lower than the actual market price.
The difference with this current system of subsidy payment is the fact that the NNPC is making the payments to itself or deducting the amount as cost from its revenue, and not paying it to other oil marketers as was the case in past subsidy regimes. This is because the NNPC had been the major importer and supplier of PMS, over the last couple of months.
Breakdown of amount spent on subsidizing petrol on a monthly basis, showed that in January, February, March, April, May and June 2017, N37.26 billion, N6.3 billion, N8.207 billion, N8.207 billion, N7.743 billion and N11.79 billion was spent incurred by the NNPC respectively; while for the months of July to December, the NNPC incurred subsidy of N10.25 billion, N7.939, N7.522 billion, N6.849 billion, N16.785 billion and N15.677 billion respectively.
In addition, the report stated that from January to December 2017, payments by the NNPC to the Federation Account , Joint Venture, and Federal Government for debt repayment stood at N857.36 billion, N644.05 billion and N19 billion respectively.
The NNPC, had earlier in March, disclosed that it was incurring an under recovery of N774 million daily based on the questionable increase of Nigeria’s fuel consumption to 50 million litres per day.
Group Managing Director of the NNPC, Mr Maikanti Baru, had blamed the high value of the under recovery to rising fuel consumption which it attributed to massive smuggling of petroleum products to neighbouring countries.
Baru insisted that the activities of the smugglers had led to recent observed abnormal surge in the evacuation of petrol from less than 35 million litres per day to more than 60 million litres per day, which was in sharp contrast to established national consumption pattern.
He had also raised an alarm on the proliferation of fuel stations in communities with international land and coastal borders across the country, insisting that the development had energized unprecedented cross-border smuggling of petrol to neighbouring countries, making it difficult to sanitise the fuel supply and distribution matrix in the country. He revealed that detailed study conducted by the NNPC indicated strong correlation between the presence of the frontier stations and the activities of fuel smuggling syndicates.
Providing a detailed presentation of the findings, the NNPC boss noted that 16 states, having among them 61 local government areas with border communities, account for 2,201 registered fuel stations.
The fuel tank of the petrol stations, he noted, had a combined capacity of 144.998 million litres of petrol, about four times more than Nigeria’s average fuel consumption of 35 million litres daily.
Baru explained that because of the obvious differential in petrol price between Nigeria and other neighbouring countries, it had become lucrative for the smugglers to use the frontier stations as a veritable conduit for the smuggling of products across the border, saying this had resulted in a thriving market for Nigerian petrol in all the neighbouring countries of Niger Republic, Benin Republic, Cameroun, Chad and Togo and even Ghana which has no direct borders with Nigeria.