PPMC: Petrol subsidy will escalate to N3tn annually under current market conditions

The Petroleum Products Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC), says the annual subsidy on petrol may rise to N3 trillion under current market realities.

Isiyaku Abdullahi, managing director, PPMC, disclosed this on Wednesday at a panel session during the 15th OTL Africa Downstream Week 2021 in Lagos.

Subsidy or under-recovery is the underpriced sales of premium motor spirit (PMS), better known as petrol.

“At $80 crude oil, 60 million litres daily consumption and N411/$1 forex, PMS under-recovery per litre will be N138/litre. Daily PMS under-recovery will be N8.3bn. Annual PMS under-recovery will escalate to N3 trillion,” he said.

TheCable had exclusively reported in September that Petrol subsidy payments gulped N714 billion in the last seven months, shrinking monthly revenue accrued to the federation account.

The NNPC, which has been the sole importer of petrol into the country in recent years, has been bearing the subsidy cost since it resurfaced.

Isiyaku said the rehabilitation of the country’s refineries and the construction of condensate refineries as well as the Dangote refinery, the Nigerian oil market would transform from import-dependent to a net exporter by 2024.

He explained that deregulation of the downstream sector might push an accelerated switching to Compressed Natural Gas and Liquefied Petroleum Gas, subject to global energy prices trend in the near term.

According to him, the Petroleum Industry Act (PIA) presents a unique opportunity for investments across the value chain.

Timipre Sylva, minister of state for petroleum resources, had said that subsidy payments on fuel would go on the full implementation of the PIA.