Financial difficulties hit NNPC as petrol landing cost nears N180/litre

macfranc007 January 22, 2018 Nigeria News today & Breaking news ▷ Read Nigerian newspapers 24/7 Jerrywright Ukwu

- The account of the Nigerian National Petroleum Corporation (NNPC) is increasingly over-burdened

- This is due to the landing cost of Premium Motor Spirit (PMS), otherwise called petrol

- The cost of imported petrol now hovers at between N175-N180/per litre

A report by Daily Trust indicates that the account of the Nigerian National Petroleum Corporation (NNPC) is increasingly over-burdened.

According to the report, this is due to the landing cost of Premium Motor Spirit (PMS), otherwise called petrol, which has risen following the recent surge in global oil price.

NAIJ.com checks reveals that the price of crude oil hit more than three-year high at the beginning of last week rising to $70 per barrel for the first time since December 2014.

NNPC account faces financial difficulties as petrol landing cost nears N180/litre

These are worrying times for Nigeria's oil sector managers. Photo credit: NNPC

The NNPC had in December 2017 hinted that Cost, Insurance and Freight (CIF) price of PMS was $620 per metric tonne, and that at N305 to a dollar, PMS landing cost translated to N171 per litre. At that time, oil price traded below $65 per barrel.

Experts however estimate that with the recent rise in oil price and based on the Petroleum Product Pricing Regulatory Authority (PPPRA) template, the cost of imported petrol now hovers at between N175-N180/per litre.

A senior official at a new generation bank said: “You will agree with me that today, based on my own estimate, the naira landing cost of petrol in Nigeria is actually somewhere between N175-N180/per litre which means that if the government should fully deregulate the oil sector, there would be higher price for petroleum product.

“If you look at the PPPRA template and where crude oil prices are in addition to shipping cost and using the official CBN exchange rate, you would have an idea of what the cost of refined products is.”

He said that anytime oil price went up, the naira landing cost of petroleum products also increased.

“It is a fact that PMS prices will go up and the fact that our refineries are not functioning means we are vulnerable to shocks,” the Head of Energy Research at another bank said.

At the landing cost of N171 per litre, NNPC recorded under-recovery of N26 on a litre of the commodity.

However, with prices hovering between N175-N180, according to industry experts’ prediction, N33 is being spent on every litre of petrol by the corporation to keep the pump price at N145.

The NNPC while clarifying a statement wrongly attributed to Managing Director of Petroleum Products Marketing Company (PPMC), Mr. Umar Ajiya at the weekend explained that there was under-recovery in the importation and sale of PMS by NNPC, but the burden is categorized as business losses which the Act establishing NNPC recognizes.

Mr. Ajiya, according to NNPC, had made it explicitly clear that the losses from the PMS imports by NNPC could not be classified as subsidy since it was not appropriated for by the National Assembly.

Meanwhile, fuel scarcity have continued in various filling stations as motorists and users of Premium Motor Spirit queue up in Lagos and Ogun states.

Many fuel stations were shut down on Sunday, January 21, while others sold petrol above the official pump price of N145 per litre.

It was gathered that some of the stations in the state sold products between N160 and N180 per litre with a charge fee of N200 or more for those who intend to buy in jerrycans.

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