+234-1-453-7796
info@equitypetroleum.com | | |

FG’s revenue shrinks as petrol subsidy continues to rise

source Emergy Mix Report on Jan 8, 2020

Lower amounts of revenue might be available for sharing by the three tiers of government through the Federation Accounts Allocation Committee (FAAC) in the coming months as the cost borne by the Nigerian National Petroleum Corporation (NNPC) to subsidise petrol has increased by about N17 per litre, Daily Trust reports.

Subsidy on Premium Motor Spirit (PMS), otherwise called petrol, rose to N38 per litre on Monday, according to figures obtained from the Petroleum Products Pricing Regulatory Agency (PPPRA).

Subsidy or technically, under-recovery, averaged N21 per litre in December 2019, the data showed.

The latest increase comes just as oil prices on Monday climbed above $70 a barrel for the first time in four months.

The rise in the price of oil followed fears that the US airstrike that killed Iran’s top military commander may trigger retaliation and disrupt global oil supplies.

Rising tensions between the U.S and Iran have caused considerable turbulence in the oil markets.

Daily Trust reports that whenever there is a surge in oil price, the expectation is that Nigeria will earn more dollars from crude exports but because the country imports the bulk of petrol it consumes and sells below the market price, NNPC which is the sole importer of the product for Nigeria, incurs billions in subsidy (under-recovery) daily.

The PPPRA figure showed that PMS landing cost increased from N162.91 per litre in December to N164.13 on Monday just as the open market price for the commodity soared to N183.50 on Monday, compared to N182.28 in December. The latest increase shows N38 per litre difference which NNPC currently incurs.

PPPRA estimates daily NNPC under-recovery (subsidy) at over N1.2 billion. It means that on a daily basis, over N1.2bn cannot go to the treasury for sharing to all the states. Daily Trust reports that heavy subsidy burden in the past have contributed to NNPC’s failure to meet its obligation to FAAC thereby leaving federal and state workers including contractors without salaries or pay for months.

FAAC is made up of the 36 state commissioners of finance including officials of federal revenue generating agencies who gather in Abuja monthly to share monies earned the previous month.

The major revenue generating agencies include customs, FIRS and NNPC and remittances by the NNPC form the largest chunk of the monies shared at FAAC but NNPC remits funds only after deducting expenses including subsidy (under-recovery) on petrol.

 

Source: Daily Trust


More Insights
18bn litres of petrol imported into Nigeria in 2019 – PPPRA

A report by the Petroleum Products Pricing Regulatory Agency (PPPRA) shows that over 18 billion litres of Premium Motor Spirit (PMS), also called petrol, was imported in 2019. According to the report, the total quantity of PMS supplied across the nation as at November was 18, 623,992,092 litres and the PMS average sufficiency stood at 40.68…

Oil prices drop as alarm over Iran strike fades

Oil futures fell yesterday from peaks hit in frenzied early trading after a rocket attack by Iran on American forces in Iraq raised the spectre of a spiralling Middle East conflict and disruption to crude flows. Prices gave up most of their early gains as oil production facilities remain unaffected by attacks. Tweets by U.S.…

ADM Energy to raise funds through rights issue

ADM Energy Plc has revealed plans to raise £150,360 by way of rights issue. The company said in a notice filed at the London Stock Exchange on Wednesday that it would issue 2,148,000 new ordinary shares of one penny each at a price of seven pence per share to Zark Capital Limited. It said following…

Global aviation fuel market to hit $325bn by 2026

The Aviation Fuel Market is set to grow from its current market value of more than $160 billion to over $325 billion by 2026; as reported in the latest study by Global Market Insights, Inc. The rising construction and expansion of airports coupled with rising production and delivery of aircrafts are driving the market share.…

EPSNL Insights in a collation of Nigeria's oil and Gas Industry news and developments pulled together from various sources to enhance our site's user awareness...


Previous Insights
Nigerian crude offered from S-African storage as Total wins BPCL tender

A cargo of Nigerian crude was offered from storage in South Africa, traders said on Wednesday, reflecting the Brent market's move into a structure...

Shell to begin gas production at expanded Gbaran-Ubie gas project

Royal Dutch Shell says it has begun gas production from the second phase of the Gbaran-Ubie project in Nigeria's Niger Delta, Nasdaq reports. The project...

NNPC, IOCs plan joint security apparatus to reduce oil and gas sabotage

The Nigerian National Petroleum Corporation (NNPC) is working closely with the international oil companies (IOCs) to deploy a structured and holistic security apparatus to...