Speculations are circulating regarding the possibility that the Nigerian Federal Government may need to allocate approximately N1.68 trillion towards Premium Motor Spirit (PMS), commonly known as petrol, subsidies between September and December 2023….CONTINUE READING....KINDLY READ THE FULL STORY HERE▶

These speculations have arisen following reports indicating that the government has quietly reinstated the fuel subsidy regime, which had been abolished by President Bola Tinubu on May 29 during his inauguration.

On Thursday, reports hinted at the likelihood that the Federal Government had discreetly reverted to the fuel subsidy system, evidenced by the disbursement of N169.4 billion as a subsidy for the month of August. It is understood that this payment was made to maintain the petrol pump price at N620 per liter.

As reported by Daily Trust, the N169.4 billion subsidy payment for August was funded partially by dividends received from the Nigerian Liquefied Natural Gas (NLNG) for the same month.

Documents from the Federal Account Allocation Committee (FAAC) revealed that the NLNG disbursed $275 million as dividends to Nigeria through NNPC Limited in August 2023.

NNPC Limited is reported to have utilized $220 million (equivalent to N169.4 billion at an exchange rate of N770 per dollar) from this sum to cover fuel subsidies, retaining $55 million.

However, in what appears to be a return to the fuel subsidy regime, it is anticipated that the federal government may need to allocate more funds for subsidies in the remaining months of 2023. This is attributed to the rising global oil prices and the foreign exchange crisis in the country.

Although neither the government nor NNPC Limited has officially confirmed the reintroduction of petrol subsidies, fuel marketers have indicated to The Punch that, given the depreciation of the naira against the United States dollar and the surging international crude oil prices, the pump price of petrol should be in the range of N890 to N900 per liter.

It is reported that the subsidized ex-depot price of petrol, as offered by NNPC Limited, currently stands between N585 and N600 per liter, depending on the location of purchase.

Based on the projected unsubsidized rate of N890 per liter and the ex-depot cost of N600 per liter, the government may currently be subsidizing approximately N290 per liter.