Managing Director of Petroleum Products Marketing Company (PPMC), Isiyaku Abdullahi, says the annual subsidy on Premium Motor Spirit (petrol) will rise to N3tn if the current market realities persist. Abdullahi said this on Wednesday at a panel session during the 15th OTL Africa Downstream Week 2021 in Lagos.
“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 N3tn,” he said.
The Federal Government had in March 2020 removed petrol subsidy after reducing the pump price of the product to N125 per litre from N145 following the crash in oil prices.
The subsidy resurfaced in January 2021 as the government left the pump price of petrol unchanged at N162-N165 per litre despite the increase in oil prices.
Isiyaku said with the rehabilitation of the country’s refineries and the construction of condensate refineries as well as the Dangote refinery, the Nigerian fuels market would transform from import-dependent to a net exporter by 2024.
He said full 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.
Abdullahi the Petroleum Industry Act presents a unique opportunity for investments across the value chain.
Executive Secretary/Chief Executive Officer, Major Oil Marketers Association of Nigeria, Clement Isong, said with the Nigerian downstream sector headed for major changes, the regulator must strive to provide a level playing ground, guard against the negative effect of a monopoly and encourage inflows from private sector investments.
