Based on a Punch report, the consumption of Premium Motor Spirit, popularly called petrol, has risen to about 80 million litres daily, pushing up subsidy on the commodity to an estimated N484bn monthly, going by latest figures from the Nigerian National Petroleum Company Limited. This is higher than the 66m litres daily consumption announced by the Group Chief Executive, NNPCL, Mele Kyari last month Meanwhile, based on data from the Nigerian bureau of statistics, the total value of premium motor spirit imported in Q1 2022, Q2 2022 and Q3 2022 were N1.51trn, N949bn and N1.20trn respectively. 

In 2020, a steep decline in global crude prices triggered by the pandemic completely wiped out the subsidy via significantly lower landing costs, paving the way for a reduction in the pump price of petrol in mid-March and talks of deregulation. The PPPRA announced a reduction in ex-depot price to N113/litre and the official pump price to N125/litre. Between June and November 2020 however, the petrol price was revised four times, rising from N121.50–N123.50 per litre in June to N140.80-N143.80 in July, N148-N150 in August, N158- N162 in September and N162-N165 in November. Since November 2020, however, the government has been unable to officially revise the pump price of petrol despite increasing crude prices to avoid a backlash from the severely impoverished populace despite extremely tight fiscal conditions and ballooning cost of subsidies. 

However, the product's scarcity has led to arbitrary increase in price above the government's approved price of N185 per litre. The pump price of petrol, which was between N162 and about N170 per litre prior to last year, suddenly started moving up to c.N200 per litre when the first disruption in the petrol supply occurred in the first quarter of 2022 due to the importation of adulterated petrol into the country by the Nigerian National Petroleum Corporation. Since then, the country has not recovered from the event, as product scarcity and racketeering have persisted. Oil marketers have consistently blamed the shortages and price hike on the unavailability of the product, the high cost of renting daughter vessels and the cost of trucking products to many parts of the country, particularly the far north and east. 

The Federal Government has announced the removal of fuel subsidies in 2023 and has urged Nigerians to prepare for higher fuel prices that will follow. Though we realize how politically sensitive this discourse is, we see no option for the incoming government amidst a tight fiscal space. Undoubtedly, an attempt to revise the price to suit current realities will be strongly resisted by the populace who have been hard hit by two recessions and a pandemic in the last 7 years amid rising food and utility costs, making us believe the elimination of the subsidies will be gradual starting possibly from the second half of the year.