Fuel subsidy appears to have returned, as the Nigerian National Petroleum Corporation (NNPC), said it recorded ‘under recovery’ of N49.86 billion between January and March 2017, Vanguard reports.
Under-recovery in downstream petroleum marketing parlance, is when the expected open market price of PMS, which includes the cost of importation and distribution of the commodity, such as marketers’ margins, landing cost and freight cost, is above the approved official retail price at the pump. Giving a breakdown of the figures, the NNPC in its latest financials, the March 2017 Monthly Financial and Operations Report, stated that it recorded under-recoveries of N37.26 billion, N6.3 billion and N6.3 billion for January, February and March 2017 respectively.
Though the NNPC did not state the amount per litre, the total amount was charged from proceeds of its domestic crude oil and gas sales. Today, with the retail price of Premium Motor Spirit (PMS), at N145 per litre, the NNPC is absorbing the extra cost and is paying the subsidy to itself. This might not be unconnected with the increase in the price of crude oil in the international market, from about $20 per barrel in 2015 to about $50 per barrel for most part of 2017.