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Economy

Global oil price surge put pressure on government to remove daily petrol subsidy of N8.28b

 

—-NNPC , PPPRA disagree on exact figures of petrol subsidy.

–as PMS landing cost hits N264.65/Litre

The rapid rise in global oil prices to record highs has pushed the subsidy cost being incurred by the Federal Government to N8.28bn daily.

This has therefore put pressure on the Nigeria National Petroleum Corporation(NNPC) to remove subsidy on the product which analysts said is consuming more than 50 per cent of its remittances to the Federation Account.

The data also revealed that without subsidy, petrol would be selling for about N300 per litre as the landing cost of the product rose to N276.94 per litre last Friday from N249.42 per litre in July 30.

The Economic Confidential had reported on September 28 that the NNPC spent a total of N905.27bn on petrol subsidy from January to August, citing data from the corporation.

The subsidy, which the NNPC prefers to call ‘value shortfall’ or ‘under-recovery, resurfaced in January this year as the government left the pump price of petrol unchanged at N162-N165 per litre despite the increase in oil prices.

President Muhammadu Buhari has said the federal government’s expenses on petrol subsidy has eaten into the revenue that should have been available to fund the 2021 budget.

He spoke on Thursday when he presented the 2022 appropriation bill at the National Assembly.

He said the government was forced to suspend a further increase in the pump price of petrol due to opposition from the labour unions and other stakeholders.

“The National Assembly will recall that in March 2020, the Petroleum Products Pricing Regulatory Agency(PPPRA) announced that the price of petrol would henceforth be determined by market forces.

“However, as the combination of rising crude oil prices and exchange rate combined to push the price above the hitherto regulated price of 145 Naira per litre, opposition against the policy of price deregulation hardened on the part of labour unions in particular.

“Government had to suspend further upward price adjustments while engaging labour on the subject. This petrol subsidy significantly eroded revenues that should have been available to fund the budget”, observed President Buhari.

Responding to an enquiry on whether NNPC would continue to shoulder the financial burden of petrol subsidy, the corporation’s Group General Manager, Group Public Affairs, Garba-Deen Muhammad, replied, “NNPC has made no secret about the burden it is shouldering.”

The Federal Government had in March 2020 removed petrol subsidy after reducing the pump price of the product to N125 per litre from N145 following the crash in oil prices.

The NNPC, which has been the sole importer of petrol into the country in recent years, has been bearing the subsidy cost since it resurfaced.

The price of crude oil, which accounts for a large chunk of the final cost of petrol, has continued to rise in recent months, with Brent, the international oil benchmark, closing at $82.39 on October 8, up from $77.72 on July 30. It increased further to $83.94 per barrel as of 5:05 pm Nigerian time on Monday.

The Petroleum Products Pricing Regulatory Agency(PPPRA) had in March this year released a pricing template that indicated the guiding prices for the month.

The template, which showed that the petrol pump price was expected to range from N209.61 to N212.61 per litre, was greeted with widespread public outcry and was later deleted by the agency from its website.

It was based on an average oil price of $62.22 per barrel, and the landing cost of petrol was put at N189.61 per litre.

Based on the PPPRA template and Platts data, the expected pump price of petrol rose to N299.94 per litre on October 8 from N272.34 per litre on July 30.

The expected retail price of N299.94 per litre and the current pump price of N162 per litre indicate a subsidy of N137.94 per litre as of October 8, compared to N110.34 per litre on July 30.

With daily petrol consumption put at about 60 million litres by the NNPC and a subsidy of N N137.94 per litre, daily subsidy increased to N8.28bn last Friday from N6.62bn on July 30.

The rising price of crude oil pushed the cost of petrol quoted on Platts to $822.75 per metric tonne (N254.25 per litre, using the I&E rate of N414.40/$1) on October 8 from $748.50 per MT (N228.91 per litre) on July 30.

The freight cost increased to $26.77 per MT (N8.27 per litre) last Friday from an average of $21.63 per MT (N6.62 per litre) used by the PPPRA in its March template.

Other cost elements that make up the landing cost include lightering expenses (N4.81), Nigerian Ports Authority charge (N2.49), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N2.17).

The pump price is the sum of the landing cost, wholesale margin (N4.03), admin charge (N1.23), transporters allowance (N3.89), bridging fund (N7.51), marine transport average (N0.15), and retailer margin (N6.19).

While marketers have continued to stress the need to allow market forces to determine the pump price of petrol and do away with subsidy, it remains uncertain whether the discussions between the Federal Government and labour unions will lead to the deregulation of petrol prices.

Meanwhile, both the NNPC and PPPRA have disagreed on the actual amount which the government is pending as a petroleum subsidy.

According to a source in the Petroleum Products Pricing Regulatory Agency (PPPRA), there exists a difference between the agency’s cost and that of the Nigerian National Petroleum Corporation (NNPC).

A subsidiary of the NNPC, the Pipelines and Products Marketing Company(PPMC) is the sole importer of the product.

The NNPC said the source has a higher landing cost than that of the PPPRA. Although the agency had last year announced the deregulation of the product, the Federal Government had recourse to subsidising it when the landing cost became unbearable for the end-users.

The NNPC that termed it under recovery regime has left the pump price at a band between N162 and N165 per litre.

From the PPPRA landing cost of N264.65 per litre, there exists a subsidy or an under-recovery of N102.65 per litre.

In the last few years, many stakeholders within and outside the federal government have called for the scrapping of the subsidy regime for premium motor spirit (PMS), better known as petrol.

Zainab Ahmed, Minister of Finance, Budget and National Planning, in July 2021, advocated the end of fuel subsidy, saying it “costs as much as N150 billion” monthly.

Her comment came four months after Mele Kyari, Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), had said the company “may no longer be in a position” to bear the “subsidy burden”.

 

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Economy

Dangote splashes N720bn on 4000 CNG- powered trucks, lifts 42m MSMEs

–as Presidency, stakeholders hail bold move
Funso OLOJO 
Dangote Petroleum Refinery has invested over N720 billion to implement its landmark initiative of deploying 4,000 Compressed Natural Gas (CNG)-powered trucks for the nationwide distribution of petroleum products, which is expected to save Nigerians over N1.7 trillion annually.
This bold step will see the privately-owned refinery absorb over N1.07 trillion annually in fuel distribution costs.
The initiative is also poised to significantly benefit over 42 million Micro, Small and Medium Enterprises (MSMEs) by reducing energy costs and enhancing profitability.
The initiative, which eliminates transportation costs for fuel marketers and large-scale consumers, is expected to help reduce pump prices and inflation.
From 15 August, Dangote will begin the direct delivery of petrol and diesel to filling stations, industrial facilities, and other high-volume consumers.
According to a statement from the refinery, it aims to meet Nigeria’s daily consumption of 65 million litres of refined petroleum products.
This includes 45 million litres of Premium Motor Spirit (PMS), 15 million litres of diesel, and 5 million litres of aviation fuel.
With the average logistics cost estimated at N45 per litre, the refinery will cover over N1.07trn annually in free distribution expenses.
Dangote Group is investing N720 billion in the acquisition of 4,000 CNG-powered trucks as well as the establishment of nationwide CNG ‘mother and daughter’ stations, among other infrastructure to implement the free distribution initiative.
This strategic programme forms part of Dangote’s broader commitment to eliminating logistics bottlenecks, enhancing energy efficiency, promoting environmental sustainability, and supporting Nigeria’s economic development.
 The company noted that lower fuel distribution costs will help reduce production costs, ease inflationary pressures, and stimulate economic growth.
The initiative is also expected to resuscitate dormant filling stations, fostering job creation in the process.
 Over 15,000 direct jobs are projected to be created across the logistics chain, including drivers, station managers, and attendants at the CNG stations.
The refinery also emphasised that this programme would help curb cross-border smuggling of petroleum products and support a more efficient and environmentally friendly distribution system.
Meanwhile, the Presidency has described the initiative as a pivotal moment in the Federal Government’s push to mainstream gas-powered transportation.
Commercial Coordinator of the Presidential Compressed Natural Gas Initiative (PCNGI), Tosin Coker, praised the move as a strong vote of confidence in Nigeria’s gas-fuelled future.
“Dangote Group’s acquisition of 4,000 CNG trucks is not only impressive in scale but also highly strategic,” he said.
 “It signals to the market that CNG is no longer a distant prospect but a current, practical solution to high energy costs, emissions, and supply chain challenges.
” PCNGI regards this as a milestone achievement in our efforts to accelerate gas-powered transport adoption.”
The Independent Petroleum Marketers Association of Nigeria (IPMAN) also commended the development, calling it a timely resolution to longstanding challenges in the downstream sector.
IPMAN’s National Publicity Secretary, Chinedu Ukadike, stated that the new model would significantly reduce logistical burdens for independent marketers by delivering more affordable fuel directly to filling stations.
“Our pipelines have been non-functional for years, yet nothing has been done to revive the infrastructure linking the country’s 21 depots.
“We’ve had to rely on expensive transport from coastal depots,” Ukadike said.
 “Dangote’s intervention lifts a huge burden off the shoulders of independent marketers.”
Development Economist and Policy Analyst, Professor Ken Ife, said the initiative would drive down the price of PMS and yield widespread benefits for Nigerians.
CEO, Financial Derivatives Company, Bismarck Rewane, dismissed concerns about the refinery becoming a monopoly, arguing that inefficiencies in the sector have been systemic and long-standing.
 He added that the scheme would help curb the parasitic role traditionally played by middlemen.
“What Dangote is doing achieves two key objectives: delivering products across the entire country at a uniform price by eliminating bridging costs, and significantly reducing logistics expenses through the use of CNG-powered trucks to reach every corner of the nation.
“In economic terms, middlemen—who typically do not invest—are often viewed as parasitic, extracting margins simply for distributing goods.
“Dangote is bypassing this layer by directly handling distribution and, notably, providing credit facilities to the retail end of the business,” he said.
Energy expert and co-founder of Dairy Hills, Kelvin Emmanuel, said Dangote’s decision to absorb logistics costs marks a turning point that could finally allow Nigerians to enjoy the benefits of local refining.
Energy analyst Ibukun Phillips described the move as “revolutionary”, suggesting it could reshape Nigeria’s energy sector by improving affordability and access, particularly in rural communities.
“Rural consumers, who typically pay more despite earning less, stand to benefit immensely.
“This could also revive abandoned filling stations and promote equitable distribution,” she explained.
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Economy

NNPCL raises alarm over syndicated attacks to distract leadership from ongoing reforms

Funso OLOJO 

The Nigerian National Petroleum Company Limited (NNPCL) has raised the alarm over what it described as a coordinated sabotage campaign on its management.

In a statement by the management of the Corporation, the attack was being sponsored by whom it described as ‘known and faceless actors’ to distract its  management from its reform agenda that is meant to rid the corporation of the endemic corruption that has eaten deep into the operations of the national oil company.

” The management of NNPCL has uncovered an emerging coordinated sabotage campaign being waged by a syndicate of known and faceless actors, both outside and within various levels of the organisation.

“This group is actively spreading lies and misinformation simply to discredit NNPC Ltd.’s leadership and derail the organisation’s ongoing transformation into a corruption-free, performance-driven energy company, in line with the mandate of His Excellency, the President of the Federal Republic of Nigeria.

“Their tactics include planting scandalous and fabricated reports, curated to distract leadership, mislead the public, and undermine the commitment of our dedicated workforce and reform-minded Nigerians.

“These are calculated efforts by those who feel threatened by reform, transparency, accountability, and change—clear evidence of the lengths to which they will go to obstruct the transformation of Nigeria’s foremost energy institution.

“We expect a surge of defamatory content in the days and weeks ahead.

” NNPC Ltd. remains undeterred. The transformation is underway, and no amount of sabotage will stop it.

“We urge our dedicated staff, stakeholders, and all patriotic Nigerians to stay focused, ignore the noise and not be discouraged. We remain on mission.

It could be recalled that after the removal of Mele Kyari as the Group Managing Director of the NNPCL, the new management uncovered an homonguous scale of misappropriation of public funds running into billions of dollars which led to the sack of some of the senior staff, including the Managing Directors of the State- owned Refineries.

The investigation launched into the financial recklessness of the past administration of the NNPCL involved the sum of $2.96billion.

In May,2025, the Economic and Financial Crimes Commission(EFCC) detained Mr Kyari over the investigation.

The anti- graft agency also uncovered a staggering N80 billion in multiple bank accounts belonging to one of the sacked Managing Directors of the Nigerian National Petroleum Corporation Limited (NNPCL) refineries.

The discovery was part of an ongoing investigation into the alleged misappropriation of $2.96 billion for refinery rehabilitation.

It could also be recalled that the anti-graft agency arrested former managing directors and senior officials of the three major state-owned refineries, including Port Harcourt Refining Company (PHRC), Warri Refining and Petrochemical Company (WRPC), and Kaduna Refining and Petrochemical Company (KRPC).

Also recall the new NNPCL management had also fired the Managing Directors of the three refineries under its purview

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Economy

Dangote Refinery purchases 4,000 CNG tankers for direct distribution of petrol, diesel to marketers, dealers 

Funso OLOJO 
The Dangote Refinery has concluded plans to commence direct sales and distribution of Petroleum Motor Spirit(PMS) known as petrol and Automotive Gas Oil(AGO) known as diesel to consumers nationwide.
This initiative, said the management of the Refinery, is meant to make the products accessible and cheaper to the final users as the cost of logistics will be borne by the Refinery.
To this end, the Refinery has purchased a total of 4000 CNG – powered tankers for this purpose.
The initiative, declared the Refinery management, is designed to transform Nigeria’s fuel distribution landscape.
“Effective 15th of August 2025, the Refinery will begin the distribution of Premium Motor Spirit (PMS) and diesel to marketers, petrol dealers, manufacturers, telecoms firms, aviation, and other large users across the country, with free logistics to boost distribution network.
“To ensure smooth take-off of this scheme, Dangote Refinery has invested in the procurement of 4,000 brand-new Compressed Natural Gas (CNG)-powered tankers.
“This phase of the programme will continue over an extended timeframe.
“The refinery is also investing in Compressed Natural Gas (CNG) stations, commonly referred to as daughter booster stations, supported by a fleet of over 100 CNG tankers across the country to ensure seamless product distribution.
“This strategic programme is part of our broader commitment to eliminating logistics costs, enhancing energy efficiency, promoting sustainability and supporting Nigeria’s economic development.
“It affirms our dedication to improving the availability and affordability of fuel, in support of broader efforts to strengthen the economy and improve the well-being of all Nigerians.
“Under this initiative, all petrol stations purchasing PMS and diesel from the Dangote Petroleum Refinery will benefit from this enhanced logistics support.
“Key sectors such as manufacturing, telecommunications, and others will also gain from this transformative initiative, as reduced fuel costs will contribute to lower production costs, reduced inflation, and foster economic growth.
“Players in these key sectors and others can purchase directly from the Dangote Petroleum Refinery.
“In addition, the refinery will offer a credit facility to those purchasing a minimum of 500,000 litres—allowing them to obtain an additional 500,000 litres on credit for two weeks, under bank guarantee.
“This pioneering effort marks a major milestone in our vision to revolutionise Nigeria’s energy sector.
“Dangote Refinery is dedicated to ensuring that no place is left behind.
 “Our goal is to provide equitable access to affordable fuel for all Nigerians, regardless of location, making energy more accessible and sustainable for everyone, wherever they may be.
“It is expected to revitalise previously inactive petrol stations, thereby driving job creation, stimulating small and medium-sized enterprises (SMEs), increasing government revenue, improving fuel access in rural and underserved communities, and strengthening investor confidence in Nigeria’s downstream petroleum sector.
“This initiative is inline with the Renewed Hope Agenda of His Excellency, President Bola Ahmed Tinubu, reflecting our shared commitment to economic progress, stability, and inclusive development.
“We sincerely thank the Federal Government for its continued support, especially through the Naira-for-Crude scheme, which has helped stabilise fuel supply amid global price volatility.
“It marks a major revolution in the midstream and downstream sectors and stands as a key example of President Bola Tinubu’s bold and reformative economic policies.
“We invite marketers, petrol dealers, manufacturers, telecom companies, and all key stakeholders to embrace this landmark initiative.
“The registration process, including Know Your Customer (KYC) verification, will take place from 16 June to 15 August, spanning a total of 60 days” the management of the Refinery declared in a statement.
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