Peter Uzoho
The average daily consumption of petrol in Nigeria has reached 50 million litres, surpassing the previous figure of 46.38 million litres in July 2023. This increase comes just two months after the removal of subsidies by the current administration. Despite the ongoing petrol scarcity in filling stations across Nigeria, the rise in consumption can be attributed to the resurgence of smuggling activities fueled by subsidy payments.
Mr. George Ita, the Head of Public Affairs at the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), confirmed this new consumption figure while dispelling rumors that the daily fuel consumption had reached 60 million to 65 million litres. Ita clarified, “Now, I can confirm to you that our daily consumption hasn’t surged up to anywhere near these (60 million to 65 million litres) levels. Average consumption is 50 million litres daily.”
However, Ita avoided addressing the question of petrol smuggling to neighboring African countries, stating that only security agencies responsible for manning Nigeria’s international border points can tackle this issue.
In July last year, NMDPRA had announced that the country’s petrol daily consumption figure stood at 46.38 million litres following the removal of subsidies by the federal government. This represented a 35 percent reduction compared to the previous daily consumption of 65 million litres.
The current average daily consumption has received further reduction compared to the pre-subsidy removal levels. In January, it was 62 million litres per day, followed by 62 million litres per day in February, 71.4 million litres per day in March, 67.7 million litres per day in April, 66.6 million litres per day in May, 49.5 million litres per day in June, and finally, 46.3 million litres per day in July, as stated by Mr. Ahmed Farouk, the Chief Executive of NMDPRA at that time.
Officially, the petrol price currently stands at N897 per litre following a recent increase by the Nigerian National Petroleum Company Limited (NNPC). However, many filling stations are selling petrol at prices ranging from N930 to N950 per litre. In some locations, the pump price even exceeds N1000, reaching as high as N1400 per litre.
NNPC has clarified that the current petrol pump price does not yet reflect the actual market price. The price is expected to continue adjusting until it aligns with the international price of the commodity, implying that more price increases may occur in the near future.
Marketers and analysts have argued that the scarcity of petrol in Nigeria and the resurgence of smuggling to neighboring African countries can be attributed to the reappearance of subsidies and the monopolistic role of NNPC as the sole importer of petrol.
According to Chief Executive Officer of Swift Oil Limited, Stillian Mitakev, the only solution to the scarcity and smuggling is for the government to deregulate petrol pricing and allow the market to determine the pump price. Mitakev emphasized that due to NNPC’s advantages as the sole importer, other marketers cannot compete with the national oil company. This is because NNPC enjoys obtaining foreign exchange (FX) at the official market rate and benefits from crude sale proceeds to buy dollars at discounted rates. In contrast, marketers are left with the option of sourcing dollars at the parallel market rate.
‘Stillian stated, “No marketer will buy dollars at the parallel market rate, import petrol, and sell the product below its landing cost. That is the reason marketers pulled out from importing Premium Motor Spirit (PMS).”
‘Regarding the Dangote Refinery, despite hopes that it will alleviate petrol shortages in Nigeria, Mitakev argued that the market needs to be deregulated for the 650,000 barrels per day facility to have a significant impact. He added, “The only way Dangote Refinery can ease the petrol supply challenge is if the government deregulates the price because Dangote has not set their price now. If they do it based on market price, their price should be about N1,500 to N1,600 per litre. Anywhere in the world, petrol is between 90 cents and $1. How much is $1? It’s N1,600.”
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