The consumption of Premium Motor Spirit (PMS), commonly known as petrol, has risen to about 80 million litres per day, driving the monthly subsidy on the commodity to an estimated N484 billion, according to the latest figures from the Nigerian National Petroleum Company Limited (NNPCL). An analysis of PMS weekly evacuation data for 4–10 March 2023, obtained from NNPCL, showed that 558.83 million litres were evacuated during that period, translating to an average daily consumption of 79.83 million litres.
In mid‑last month, NNPCL Group Chief Executive Mele Kyari said the company was pumping roughly 66 million litres of petrol daily into the market, spending about N202 on every litre of PMS consumed nationwide. “By law and the Appropriation Act, there is a subsidy on the supply of petroleum products, particularly PMS imports,” Kyari explained. “Three days ago the landing cost was around N315 per litre, but we transfer it to customers at N113 per litre, creating a gap of close to N202 per litre.” Multiplying N202 by 66.5 million litres and by 30 days yields a subsidy of over N400 billion each month.
Since January, crude oil prices have hovered around $83 per barrel, while the official exchange rate has been about N460 per dollar. Operators note that crude oil price and foreign exchange rate are the primary determinants of refined petroleum product costs. Using NNPCL’s latest consumption figure of 79.83 million litres per day and a subsidy of roughly N202 per litre, the oil company would spend an estimated N483.8 billion monthly to subsidise the commodity.
NNPCL is the sole importer of petrol into Nigeria, a role it has maintained for several years. Other marketers have ceased imports because they cannot secure the foreign exchange needed for PMS purchases. NNPCL has repeatedly lamented the heavy burden of the subsidy. In February, Kyari warned that the subsidy drains the national oil firm’s cash flow, noting that the continuous funding occurs without refunds from the Federal Ministry of Finance, Budget and National Planning, despite the subsidy being budgeted for in the Appropriation Act. “There is a budget provision for it, and our country has decided to do this. We are happy to deliver, but it is a drain on our cash flow, especially when we receive no refunds from the Ministry of Finance,” he said in Abuja.
Fuel subsidy remains a contentious issue in Nigeria. Many experts and both local and international institutions have called for its removal, while labour unions oppose an outright halt, arguing that the Federal Government must first fix Nigeria’s refineries. Analysts at the Centre for the Promotion of Private Enterprise recently estimated that eliminating subsidies on PMS and foreign exchange could save the country about N10 trillion annually—N7 trillion from stopping petrol subsidies and an additional N3 trillion from ending the Central Bank of Nigeria’s foreign‑exchange subsidy. “Elimination of fuel subsidy would save an estimated N7 trillion annually, and eliminating the foreign‑exchange subsidy would unlock a minimum of N3 trillion in revenue each year from CBN forex sales to the official window,” the centre stated.
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