Fuel subsidy rises to N14.79/litre, as oil price rebounds

Following slight rebound in the prices of crude oil in the international market, the amount Federal Government is paying as subsidy for Premium Motor Spirit, also known as petrol, rose to N14.79 per litre, yesterday.
This is due to the fact that the Expected Open Market Price of petrol, yesterday, rose to N101.79 per litre, according to data obtained from the Petroleum Products Pricing and Regulatory Agency, PPPRA.

What this means is that Nigerians would be expected to pay about N101.79 per litre of PMS if the product is deregulated and if subsidy on the product is removed.

Also, PPPRA puts the Expected Open Market Price of Household Kerosene, HHK, at N114.20 per litre.

With the official retail price of the product fixed at N50 per litre, PPPRA pricing template for kerosene revealed that the Federal Government is paying N64.20 per litre as subsidy on kerosene.

After a series of rebound in the last couple of days, the price of Brent crude, however, fell below $58 a barrel yesterday, after the International Energy Agency, IEA, warned that oil prices may decline as stocks continue to increase this year.

The IEA predicted that oil stocks held by countries in the Organisation for Economic Cooperation and Development may come close to the all-time high of 2.83 billion barrels in the middle of the year.

Brent crude slipped 44 cents to $57.90, ending a three-day rally. The benchmark gained more than nine percent last week, its biggest weekly rise since February 2011, while U.S. crude futures dropped to $52.02, down 84 cents.

The PPPRA, in its updated template for February 9, released yesterday, puts the Expected Open Market Price of PMS at N101.79 per litre, based on an average Platts price of PMS for the day.

The regulatory agency puts the cost of PMS, including freight charges, at $593.95 per metric tonnes.

Using a conversion rate of 1,341 litres to a metric tonne and an exchange rate of N171.36 to a dollar, this translates to N75.90 per litre.

This cost is the amount PMS will be purchased at the refineries, if the countries refineries had been working.

PPPRA also puts landing cost at $675.38 per metric tonne or N86.30 per litre, comprising traders’ margin of $10 per metric tonne or N 1.28 per litre; lightering expenses, $30.68 per metric tonne or N3.92 per litre and Nigeria Ports Authority charge, $5.25 per metric tonne or N0.67 per litre.