Petrol subsidy hits N2.43b daily

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The task of determining the daily consumption and subsidy on petroleum products has been taken over by the Petroleum Products Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC).The development came as statistics show that the government currently pays N2.434billion daily to subsidise petrol.It was gathered that the Petroleum Products Pricing Regulatory Agency (PPPRA) saddled with the responsibility of determining the pricing template of petroleum products in the country had been unable to discharge the responsibility in the last two years.

Indeed, the PPPRA official website which displays the landing cost and other parameters for determining the price of petroleum products has been dormant in the past two years.
The Group General Manager, Group Public Affairs Division (GPAD) of the NNPC, Ndu Nghamadu, confirmed the new responsibility of the PPMC yesterday when The Guardian sought to know if the daily consumption of petrol was still 50million litres as claimed by the NNPC Group Managing Director, Dr. Maikanti Baru last year.

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Nghamadu failed to call back to provide information on the current daily consumption. It is not known what parameters PPMC uses to make projections upon which NNPC base its importation regime.

Recall that only NNPC brings in products into the country and also single-handedly determines how the under-recovery is reimbursed. Before now, PPPA was saddled with the responsibility of verifying, while the Federal Ministry of Finance also verifies the veracity of the claims by marketers as well as authorise payment through the Central Bank of Nigeria (CBN).

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Air of uncertainty currently envelops the PPPRA as the NNPC has silently taken over one of its crucial responsibilities and the Executive Secretary of the agency, Abdulkadir Umar Saidu, seems helpless.

As at yesterday, a gallon of petrol costs $2.54 Cent in the United States of America. The Naira equivalent of $2.54 Cent at official rate of N305 to the dollar is N774.7kobo. Therefore, the landing cost of a litre of petrol should be N193.68kobo (excluding freight and other port charges).

At 50million litres daily consumption, Nigeria currently pays N2.434billion per day subsidising petrol. An industry expert told The Guardian under condition of anonymity that it was time for Nigeria to do away with subsidy in order to free money for development purpose. The source said: “It is clear that if Nigeria does not do away with subsidy, the economy would crash in no distant time. How would government implement the new minimum wage?”.

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How will government fund education as demanded by the unions in that sector? How would government fund health, which is in shamble? How will government tackle poverty, which is principally fuelled by absence of critical infrastructure that will unleash the innate capacity of the Nigerian people? Why would government not use deregulation as a precondition for the implementation of a living wage that is far beyond the N30, 000 being demanded?”

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