Marketers to lose N16.5bn in #subsidy to hoarding

Petroleum marketers may have to forfeit about N16.5 billion in possible subsidy claims due to oil price increases at the international market due to hoarding of product, which they preferred to call inventory stock.
The Petroleum Products Pricing Regulatory Agency, PPPRA, in a document obtained by Vanguard at the weekend, titled: “New Framework for Petroleum Products Supply, Distribution and Pricing – May 2016,” put total subsidy accrued from April till date at N16.5 billion.

But the losses are more than made up by the high inventory level built at the time of the sudden pump price increases in premium motor spirit, PMS, also called petrol.
At the new pump price of N145/L, marketers are more than willing to forfeit any subsidy claims prior to the price increases as they were already reaping about N58.50/L against the previous pump price of N86.50/L.


As a result, less N13/L, the marketers still have a handsome excess profit of N45.50/L Vanguard reliably gathered that subsidy levels as at May 6, had reached the N13/litre mark before the Federal Government made the sudden announcement of N145/L for petrol on May 11.

This is to avoid further accumulation since there was no provision for subsidy in the 2016 national budget. Neither the Department of Petroleum Resources, DPR, nor the Petroleum Products Pricing Regulatory Agency, PPPRA, the industry regulators has offered any figure on the inventory level at the time of announcement of the pump price change. But Vanguard learnt that this was already running into billions of Naira, as daily accumulation is put at N520 million i.e. 40 million litres x N13.

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