Business

How Subsidy Removal Drags Down Petrol Consumption By 28%

Published by Tope Fakinlede on July 7th, 2023.

How Subsidy Removal Drags Down Petrol Consumption By 28%

FCG reports that average daily petrol consumption in Nigeria has fallen by 28 per cent since President Bola Tinubu scrapped subsidy on the fuel at the end of May.

FCG gathered that average daily petrol consumption fell to 48.43 million litres in June, down from the previous average of 66.9 million, according to figures released to Reuters by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

The subsidy regime had kept prices cheap for decades but it became increasingly expensive for the country.

Nigeria reportedly spend $10 billion last year on subsidy-leading to wider deficits and driving up government debt.

Since the subsidy was ended a black market in neighbouring Cameroon, Benin and Togo that relied on petrol smuggled from Nigeria has collapsed.

FCG learnt that despite having spent $2.41 billion on the subsidy in the first five months, Nigeria could save up to $5.10 billion this year from scrapping the petrol subsidy and from FX reforms, the World Bank said on June 27.

Corroborating the development the president of Petroleum Retail Outlet Owners Association of Nigeria (PETROAN) , Billy Gillis-Harry, told LEADERSHIP that his Association has developed a framework that could support government transparently and effortlessly collate adequate consumption data on petroleum consumption in the country.

Gillis-Harry, in a telephone conversation told our Correspondent that PETROAN has evolved the Petroleum Products Passport, PPP, a tool that can be perfectly deployed by the industry to transparently monitor products supply and distribution across the country.

While, commending the present administration for mustering the political will to exit the petrol subsidy regime the PETROAN president called for sustainable efforts to fix the nation’s refineries.

Meanwhile, the projected mass rollout of Compressed Natural Gas, CNG, refilling outlets across all states of Nigeria is becoming a reality with seven banks ready to manage revolving fund facility from the African Development Bank, AfDB.

The Independent Petroleum Marketers Association of Nigeria, IPMAN had sealed the deal with the bank following removal of petrol subsidy.

National President of IPMAN, Elder Chinedu Okoronkwo disclosed this development to LEADERSHIP on phone.

Our Correspondent gathered that the Association made the approach after it conducted a market survey on the cost of converting existing petrol stations to CNG outlets

LEADERSHIP authoritatively reports that the IPMAN has already commenced identification of members interested in co-locating CNG dispensers and infrastructure on their existing petrol retail outlets .

The exercise is to identify qualified potential candidates for loans to support it’s target of establishing 10-20 colocated CNG stations in each state of the federation during the first phase of its planned nationwide rollout.