- The average daily distribution of PMS via trucks in 8 years amounted to over 55 million litres daily.
- In 2022, the Nigerian government expended more than 4 trillion Naira on PMS subsidies.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) said Nigeria imported 23.5 billion litres of Premium Motor Spirit (PMS) in 2022. The Chief Executive of NMDPRA, Mr Farouk Ahmed, made this known at the 2023 PENGASSAN Energy Labour Summit in Abuja. During the period of 8years, the average daily distribution of PMS via trucks amounted to over 55 million litres daily. This is in addition to a peak of 66.7 million litres recorded in 2022.
Ahmed said the subsidy regime in Nigeria created a situation where a substantial regional Premium Motor Spirit retail pricing differential incentivised increasing cross-border smuggling. “The financial implication of PMS subsidy rose to over N400 billion monthly, translating to over N4.8 trillion (US$6bn) annually. This makes it unsustainable in the short to medium term. Subsidy on PMS hugely impacted government revenues available to all tiers of government. This led to the inability of the government to meet their obligations,” Ahmed stated.
He explained that fuel had encouraged inefficiency, waste and environmental pollution over the years. He added that these were significant bottlenecks to aligning with Sustainable Development Goals (SDGs) of providing cleaner energy. “In the year 2022, the Nigerian government expended more than 4 trillion Naira on PMS subsidy. This amounted to about 20 per cent of Fiscal Budget for the year and presented a strain on the fiscal viability of the government. It became a major obstacle to inclusive participation in the downstream petroleum sector,” he added.
In view of this, he noted that the policy decision on subsidy removal would facilitate the development of healthy, competitive markets and operational efficiency. This will promote transparency and private sector investment in the downstream value chain of Nigeria’s Oil and Gas sector. Similarly, he reiterated that the Authority would accelerate the issuance of all regulatory instruments required to deepen the utilisation of gas resources.
He added, “The Auto-gas and domestic LPG programs are also being implemented for deepening the utilisation of gas in a manner that supports the availability of cheaper and cleaner alternative energy sources for Nigerians. These programs directly link to the removal of subsidy on PMS, and the Federal Government is collaborating with its partner to provide CNG-powered mass transit vehicles and relevant CNG infrastructures.”