Zainab Ahmed, Minister of Finance minister, Budget and National Planning, says Nigeria spends N18.39 billion daily on petrol subsidy petrol payments.
Subsidy or under-recovery is the shortfall for the underpriced sales of premium motor spirit (PMS), also known as petrol.
The minister spoke on Thursday during an inquiry by the House of Representatives Committee investigating petroleum products for subsidy regime from 2013 to 2022.
Zainab was grilled over funding of subsidy payments by the Federal Government.
“For 2023, the projection is that the average daily truck-out will be N64.96 million per day; that is about 65 million per day, using an average rate at open market rate of N448.20 and then a regulator pump price of N165 per litre. This gives us an average under-recovery, that is the difference between N165 and N448, of N283.2,” she said.
“So, just multiply the amount of litre per day, the open market exchange rate of naira to the dollar and then, the gap between the pump price and open market price, the total amount of subsidy per day is N18.397bn.
“So, if you are projecting for the full year, from January to December, it will be N6.715 trillion. If you are projecting for half a year, it will be 50 percent of that, 3.375tn. I said earlier in the recommendations that we sent to parliament for consideration on MTEF is half-year that will be N3.357 trillion.
“Fuel subsidy is the difference between the pump price which is now fixed at N165 (per litre) and the landing cost which we are projecting at an average of N448 per litre in 2023. Even now, the cost is around that.
“So, the PMS subsidy we are carrying today in the nation is around N283 per litre; that is what we are carrying. So, it is the difference between the pump price and the landing cost of petroleum products in the country.”
In the first half of 2022, petrol subsidy claims amounted to N2.6 trillion — a figure above crude oil sale receipts from the Nigerian National Petroleum Company (NNPC) Limited.
The federal government has projected to spend N6.7 trillion on petrol subsidy payments in 2023.