Nigeria To Spend More Subsidising PMS As Oil Price Hits $89 Per Barrel

The Federal Government may have to brace up for higher spending on fuel subsiding as the price of crude oil has risen to its highest amount since President Muhammadu Buhari assumed office in May 2015.

As of Wednesday, Brent crude traded at $88.38 per barrel, while West Texas Intermediate crude had risen to $86.55 per barrel.

Nigeria’s Bonny Light traded at $88.24 per barrel, Brass River $89.32, while Qua Iboe traded at $89.32, THE WHISTLER can report.

The high crude oil price is a cheering news for Buhari’s administration that is facing a huge revenue problem.

This is the first time the administration is seeing oil price rise to $88 per barrel.

In 2014 under former President Goodluck Ebele Jonathan, crude oil was $93 per barrel and closed the year at $53.75.

Crude price later fell as low as $37.13 per barrel in 2015 when Buhari took over office, while it further fell below $20 during the Covid-19 lockdown in 2020.

In the N17.13tn 2022 budget, the government had projected oil benchmark price of $62 per barrel, while the production benchmark was placed at 1.88 million barrels per day.

In 2021, Nigeria’s total production capacity was put at 2.5 mbpd, but production was about 1.4 mbpd which is slightly short of the OPEC+ production quota) and an additional 300,000bpd of condensates, totaling about 1.6mbpd.

But with the high crude oil prices, there is a possibility that the amount spent importing petroleum products into Nigeria may increase.

Between January and November last year, the Nigerian National Petroleum Company Ltd subsidized the price of Premium Motor Spirits for Nigerians with the sum of N1.2trn

The NNPC in its report to the Federation Account Allocation Committee had said it incurred the sum of N25.37bn on subsidy in February. No amount was spent subsidizing the product in the month of January.

The amount moved up to N60.39bn and N61.96bn in March and April, before hitting N126.29bn and N164.33bn in the months of May and June.

For the month of July, the Corporation incurred the sum of N103.28bn as subsidy on PMS, while the figure went up to N173.13bn, N149.28bn and N163bn in August, September and October respectively.

With the deregulation of the downstream sector of the petroleum industry in 2020, the price of petrol had risen from N121.50 to N123.50 per liter in June, to N140.80-N143.80 in July, N148-N150 in August, N158-N162 in September and N163 per liter in November.

Since November 2020, the price of Premium Motor Spirit popularly known as petrol had remained unchanged despite the increase in crude oil prices in the international market.