The Federal Government on Thursday insisted that it would eventually stop subsidies on Premium Motor Spirit (PMS) – otherwise known as petrol – which is currently costing about N120 billion ($263,248 million) monthly.
The Group General Manager (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, made the disclosure at the a special ministerial briefing at the Presidential Villa, Abuja, on Thursday.
Kyari explained that while the actual cost of importation and handling charges for PMS amounts to N234 per liter, the government is selling at N162 per liter for now.
He explained that the NNPC has been absorbing the cost differential which it however, intends to stop after negotiations with organised labour groups in the country.
The GMD insisted that the NNPC could no longer afford to bear the cost, and that sooner or later Nigerians would have to pay the actual cost for the commodity.
Kyari, who avoided calling the payment a subsidy, said the NNPC expends between N100-120 billion a month to keep the pump price at the current levels, insisting that market forces must be allowed to determine the pump price of petrol in the country.
His words: “Today, NNPC is the sole importer of PMS, we are importing at market price and we are selling at N162 per litre to day. Looking at the current market situation today, the actual price could have been anywhere between N211 to around N234 to the litre.
“The meaning of this is that consumers are not paying for the full value of the PMS that we are consuming and therefore, someone is bearing that cost. The difference is being carried on the books of the NNPC and I can confirm to you that the NNPC may no longer be in the position to carry that burden.
“As we speak today, I will not say we are in subsidy regime but we are in a situation where we are trying to exit this underprice sale of PMS until we come in terms of the full value of the product in the market.
“PMS sells across our borders anywhere around N300 to the liter and in some places up to N500 to N550 to the liter.
“Our current consumption is evacuation from the depots about 60 million liters per day, we are selling at N162 to the liter, and the current market price is around N234, actual market price today.
“So, the difference between the two, multiplied by 60 million x 30 days, will give you per month. This is a simple arithmetic that we can do.
“If you want exact from our books, I do not have it at this moment but it’s anywhere between a hundred billion and up to N120 billion per month. I don’t have the exact number.”