NNPCL Price-pegging on PMS shows subsidy is back

THE Nigerian government’s periodic interference on the price of Premium Motor Spiritual (PMS), through the Nigerian National Petroleum Company (NNPCL) has shown that subsidy payment on gasoline is back.

The government has kicked against a possible hike in the Price of PMS, as the Nigeria Labour Congress (NLC) has threatened to go on industrial action if the prices increase beyond the current N617 per litre.

President Bola Tinubu has at his inauguration on May 29, at his inauguration said, “Subsidy is gone”.

However, informed analysts said price dictation by the National oil company in a deregulated market does not show Nigeria has fully deregulated the Petroleum downstream sector.

Accordingly, a breakdown of the landing cost of petrol showed that while product cost, as of August 15 2023, was N627.82 per litre, finance cost was N11.61, and operations/administrative cost N12.32, bringing the total landing cost to N651.75 per litre.

Accordingly, a breakdown of the landing cost of petrol showed that while product cost, as of August 15 2023, was N627.82 per litre, finance cost was N11.61, and operations/administrative cost N12.32, bringing the total landing cost to N651.75 per litre.

Consumers in long queues at NIPCO filling stations in Kubwa. May 2023
Consumers in long queues at NIPCO filling stations in Kubwa. May 2023

Analysts say that with the current market price, petrol ought to sell at over N720, and someone, most probably, is paying the price differential.

Meanwhile, an assurance by both the NNPCL and an official Presidential spokesperson Ajuri Ngelale, showed the federal government has tactically brought back subsidy.

“The president wishes to assure Nigerians, following the announcements by the Nigerian National Petroleum Company Limited (NNPC), on Monday that there will be no increase in the pump price of petroleum motor spirit anywhere in the country,” Ngelale said.

“We repeat, the president affirms that there will be no increase in the pump price of petroleum motor spirit.”

The President, Ngelale said, also acknowledged that there are inefficiencies within the downstream sector that are contributing to the fuel price controversy. He assured that all loopholes associated with the smooth delivery of petroleum products in the country will be addressed without delay.

“The president also wishes to affirm that there are presently inefficiencies within the midstream and downstream petroleum sub-sectors that, once very swiftly addressed and cleaned up will ensure that we can maintain prices where they are without having to resort to a reversal of this administration’s deregulation policy in the petroleum industry,” Ngelale said.

Ajuri Ngelale, Senior Special Assistant to the President on Public Affairs.

Also, the NNPCL has confirmed through its social media that there are no plans for a PMS price hike, raising further concerns about price control in a deregulated market.

“Dear esteemed customers, we at NNPC Retail value your patronage, and we do not have the intention to increase our PMS pump prices as widely speculated. Please buy the best quality products at the most affordable prices at our NNPC Retail Stations nationwide,” NNPCL said.

Contradictions in Presidency and NNPCL Statement

In a deregulated PMS market, prices are determined by market forces, not by a government template of price interference.

This development negates the Presidential spokesperson’s assertion that prices would not be increased, even when major oil marketers have been licenced to import the product.

The ICIR has earlier reported on the dangers and of allowing the NNPCL be the sole price determinant in a Petroleum downstream deregulated market.

What government’s contradictory statements mean

For an economist and the Chief Executive Officer of Cowry Assets Limited, Johnssole Chukwu, the statement means “that subsidy has been smuggled back.”

Johnson Chukwu, CEO of Cowry Asset Management Limited believes subsidy is gone

Market forces which suppose to determine the price of PMS has been suspended, he said, adding, “More worrisome is that the pains we gone through in this subsidy has actually been for nothing as the government appears to have suspended the subsidy.”

He, however, suggested that, “The appropriate measure on the subsidy removal would have been that the government would be intervening in the foreign exchange rate, while allowing the global market movement of PMS prices of crude and refined Product.”




    This, he said, would have ensured Nigeria deals with marginal increase in prices of PMS and other commodities.

    For the President of Independent Petroleum Marketers Association of Nigeria IPMAN, Chinedu Okoronkwo Okoronkwo, the licenced marketers are yet to commence the importation of PMS products.

    “NNPCL is still controlling the market price despite subsidy removal. NNPCL is still influencing market price and have access to the official exchange window

    “We are still getting our product from the NNPCL. They have come out clearly to tell you, there is no price increase. We are largely dependent on them for our importation,” Okoronkwo said.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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