Fuel Subsidy Returns as FG Incurs N586m Daily

Fuel Subsidy Returns as FG Incurs N586m Daily

There are indications that the Federal Government has started incurring N586 million daily as fuel subsidy, following the rise in crude oil price from $49 to $58 per barrel in the international market between August and October this year, Vanguard reports.

A survey of major markets around the world showed that marketers have started experiencing under recovery, meaning they get less than their cost of importing the product. While it cost $1.70 per gallon, amounting to N140.14 per litre at the New York Harbour, it also cost $550 per tonne, amounting to N125.05 per litre at Rotterdam based on the nation’s N305 to a dollar exchange rate.

Investigations also showed that marketers traders incur other cost such as littering expenses (N4.56 per litre), NPA charges (N0.84k), NIMASA (N0.22k), Financing (N2.57k), Retailers margins (N6.0), transportation cost (N3.36), Dealers margin (N2.36), bridging fund (N6.20), administrative charge (N0.30k) and marine transport average (N0.15k), amounting to N26.56 per litre.

This showed that the total cost of importing fuel from the global market ranged between N150 and N161.75 per litre, depending on location of the market, thus culminating in an under recovery of N16.75 per litre. Consequently, the government’s subsidy amounted to the N586 million as a bulk of the 35 million litres per day estimated national demand which is imported from the global market.

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