The government of Nigeria has finally removed subsidy on premium motor spirit (PMS) popularly known as Petrol as the Nigeria National Petroleum Company (NNPC) Limited Wednesday morning officially changed its pump price to N537 per litre in Abuja.
Recall that a new NNPC pump price template had emerged on Tuesday, with speculations surrounding its authenticity.
However, checks by our correspondent showed that NNPC stations have already started reflecting the new pump price.
In Lagos State, NNPC fuel is now N488 per litre as listed.
This change by the national oil company is providing clarity around prices after the removal of the controversial fuel subsidy which cost almost $10 billion annually.
According to the price template, the price of petrol has now been adjusted upward from between N189 to N194 to N537 per litre in Abuja and other North-Central States such as Nasarawa, Plateau, Kwara, Kogi, Benue and Niger.
For Lagos and other South West States such as Oyo, Ogun, Ekiti, Ondo and Osun, the price of PMS was raised from between N184 and N189 per litre to between N488 and N500 per litre.
In the South East where states such as Abia, Imo, Anambra, Enugu and Ebonyi, the price was increase from between N184 and N189 per litre to N515 to N520.
Similarly, in the North -West, the price of PMS was raised from N194 per litre to N540 while for the North-East, it moved from N199 to N550 per litre.
The NNPC Ltd had shortly after the announcement by Tinubu saidthe decision to remove the subsidy on Premium Motor Spirit (PMS) by the President is a welcome development.
The Group Chief Executive Officer (GCEO) of the NNPC, Mr. Mele Kyari during a press briefing shortly after the pronouncement by President Tinubu said the subsidy burden which has been placed on the NNPC Limited is affecting the company’s cashflow and threatening its sustainability plans due to the federal government’s inability to refund the subsidy claims.
He added that NNPC as a limited liability company cannot continue to bear the burden of subsidy on behalf of the federation if it must deliver dividends to its shareholders and be profitable.
He said, “We welcome the decision of the president to announce the removal of subsidy on PMS and this has been the major challenge for NNPC operations.
“We have been funding subsidy from the cash flow of the NNPC since government is unable to defray the cost of subsidy for the federation. We believe that this will free resources for the NNPC to continue to do the great work that this company is doing for our country and it allows us to continue to function as a commercial entity.”
Kyari assured that the company has over 30 days of PMS storage and supply and appealed to Nigerians not to indulge in panic buying.
He stated further that the company is in discussion with the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to develop a framework of the implementation of the removal of the PMS subsidy as announced by the President.
He further added that the company as the supplier of last resort as mandated by the Petroleum Industry Act (PIA) will continue to ensure availability of PMS and other petroleum products.
Tinubu had in his inaugural speech at the Eagles Square abolished fuel subsidy in Nigeria, saying it is no longer sustainable.
He had said, “On fuel subsidy, the budget I met before I assumed office and what I heard is that there is no provision for subsidy. Fuel subsidy is gone.”
The Federal Government had in the last few months been taking steps to stop the payment of fuel subsidy.
In the 2023 budget, the federal government had made provisions of N3.36trn for fuel subsidy payment to cover the first six months of this year.
This is in line with the 18-month extension announced in early 2022 by the government.
The immediate past administration of former President Muhammadu Buhari had set up a Subsidy Removal Committee which comprises the Ministry of Finance, Budget and National Planning, Ministry of Petroleum Resources, Nigerian National Petroleum Company (NNPC) Limited, the downstream and upstream regulators, Central Bank of Nigeria (CBN) and the Chief Economic Adviser to the President.
The 2023 Fiscal Framework and Appropriation Act as well as the Petroleum Industry Act (PIA) have made the provision that government should exit fuel subsidy by June 2023.
Kyari had during the inauguration of Dangote Refinery last week stated that the lingering challenge of Petroleum Motor Spirit subsidies is becoming unbearable as the burden is clearly getting out of the capacity of the state to bear.
He gave the monthly fuel subsidy burden at about N400bn monthly, adding that something needs to be done urgently to stop the spending.
It is unclear what FX exchange rate NNPC has used to arrive at its pump price but it could be around N600/$.