With the price of the global benchmark Brent crude closing at $57.94 per barrel last Monday, Nigerian government is now paying just 90 kobo as subsidy for a litre of petrol.
The Petroleum Products Pricing Regulatory Agency, which last updated the approved prices of the product on December 29, 2014, was expected to update the pricing template on yesterday but the last update put the Expected Open Market Price of petrol at N97.90.
Brent crude, which peaked at $115 per barrel in June 2014, stood at $56.42 on Sunday.
The Minister of Finance, Dr. Ngozi Okonjo-Iweala, had in December said that preliminary estimates showed that the break-even crude oil price at which the landed cost of petrol would equal the current price of N97 per litre so that there would no longer be subsidy was about $60 per barrel.
Against the backdrop of the fall in global oil prices, the landing cost of petrol dropped to N82.41 per litre as at Monday last week from N127.57 on November 3, the PPPRA data showed.
With the reduction in the retail price of petrol to N97.90 on December 29, the Federal Government’s spending on petrol subsidy has, therefore, fallen to a five-year low of N0.90 per litre as of that date, compared to N44.94 on November 3, 2014. The regulated pump price of petrol is N97.
As of November 3, the retail price of petrol was N141.94 per litre, the PPPRA stated.
Nigeria, Africa’s top oil producer, relies on importation for most of its fuel needs as the country’s refineries are in a poor state. The fall in oil price has triggered the decline in the landing cost of petrol.
There have been calls in some quarters on the government to reduce the pump price of petroleum products as the price of crude oil, which constitutes a major component in the pricing template, have plunged by more than 50 per cent.