The Major Oil Marketers Association has said that the landing cost of petrol has risen to N278 just as the price of crude oil in the international market reached $80 shortly on Tuesday, with experts worrying that subsidy payments would increase.
The international crude oil benchmark traded at $80.02 per barrel, its highest since October 2018, as of 12:09pm Nigerian time on Tuesday according to Oilprice.com. Brent had fallen to $78.89 per barrel as of 7:14pm on Tuesday, while the United States West Texas Intermediate traded 0.45 per cent lower at $75.11 per barrel.
The executive secretary and chief executive officer of MOMAN, on a phone call with our correspondent, said, “The last time we checked in September, the spot price if we assume an exchange rate of N410 per $, you have a landing cost price of N278 per litre.
“The truth is for as long as we continue to subsidise the price of fuel, we are borrowing money to consume. This means we are selling short the future generations. We need to adopt mass transportation to cut the per capita consumption of fuel and also reduce our dependence on importation to reduce the stress on the naira.”
The subsidy payments on petrol had amounted to N905.27bn in eight months from the Nigerian National Petroleum Corporation’s data. Nigeria fell short of its August quota set by the Organisation of Petroleum Exporting Countries and its allies.
This has raised concerns about double stress on the country’s finances from the angle of increased subsidy payments without a corresponding increase in crude oil earnings.
The Group Managing Director, Geoplex Drillteq Limited, Mr Wole Ogunsanya, told our correspondent that the country failed to meet its quota due to lack of investments and poor management of assets.
He said, “The OPEC quota issue is very simple; we are not doing enough work. Oil on the ground is like a swimming pool; if you take water from it every day without replenishing it, it will keep reducing till it empties.
“We are not meeting OPEC+ quota because we are either not producing, or when the price crashes, we stopped drilling new wells, repairing old ones.
“Unless we sustain investment in the upstream oil and gas sub-sector, the amount that we produce will not be sufficient. Subsidy payment now is going to increase because as the price is fixed at N165 per litre, rising crude prices would mean we pay more per litre of fuel imported into the country.”
Ogunsanya said that until Nigeria produces and refines locally, fixes its refineries and build more, subsidy payments would continue and it would be subject to the price of crude oil in the international market.
Oil and gas industry analyst, Mr Bala Zakka, said that Nigeria needed to fix its economic model as regards petroleum.
He said most OPEC+ countries had refineries and stood to benefit from rising crude prices but Nigeria might not, due to the current circumstances.