Africa News Bulletin

Higher oil prices pushing subsidy cost to N3.5trn

There are indications that the subsidy burden on the 2022 budget may worsen as oil industry experts forecast higher landing costs for imported petrol in the days ahead.

The prices of imports have been on the rise, following the rise in crude oil prices which hit $90.3 per barrel early in the week.

The Nigerian National Petroleum Corporation, NNPC, had estimated the subsidy cost at N3.0 trillion in the next 18 months based on the current landing cost of about N360 per litre..

However, industry operators said they expect the cost to rise to N413.16, about 14.8 per cent increase, following a continued pressure on the crude oil price.

They, therefore, forecast the expected subsidy cost at about N3.5 trillion for the 18 months of subsidy.

International refiners usually transfer the price of crude oil to consumers in importing countries, including Nigeria.

Analysts who spoke with Vanguard, yesterday, said a bulk of the oil revenue expected from the production of 1.8 million barrels per day, including about 400,000 barrels of condensate will go into funding petrol subsidy.

National Operations Controller, Independent Petroleum Marketers Association of Nigeria, IPMAN, Mike Osatuyi, said at the expected $100 per barrel and exchange rate of N575 to a US dollar, the landing cost would rise to N394 per litre, from less than N360 in recent times.

Original story on Vanguard

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