Naira devaluation will push petrol subsidy to N7.1b per day

The devaluation of the naira from N379/$ to N411/$ will push the daily subsidy on petrol to N7.1 billion as it will raise the product’s landing cost.

According to an economic report released at the weekend, Managing Director, Financial Derivatives Company (FDC) Limited, Mr. Bismarck Rewane, said the landing cost of petrol has increased by 61.6 per cent to N231.98 per litre from an average of N143.6 per litre in December last year.

He explained that with the rise in local consumption of petrol from 57.8 million (last year) to 93 million litres (about 60.9 per cent) subsidy payments could rise to N7.1 billion daily from N5.5 billion in June.

According to him, this was largely due to the rally in global oil prices, at $76 per barrel and currency adjustment of between N410 and N411 at the Investors and Exporters Forex Window (IEFX) from previous N379/$, leading to an increase in landing costs for imported refined products.

“Based on this new template, the expected price of Premium Motor Spirit (PMS) will increase to N254.90/litre from N239/litre estimated in April. Meanwhile, the NNPC has said that the price of petrol will remain at N162-N165/litre in July,” Rewane stated.

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