Daily petrol subsidy payment has hit N18.397 billion, Minister of Finance Zainab Ahmed said yesterday.
It means the government will pay at least N6.715 trillion in a year on petrol subsidy.
But whether the regime will remain will soon be determined by stakeholders.
Ahmed said the Federal Government plans a meeting of oil and gas industry players, political parties and labour unions on the desirability or otherwise of the subsidy regime.
She spoke at the House of Representatives investigative hearing on petroleum subsidy.
According to the minister, the government cannot sustain the current financially-burdensome regime that does not benefit the nation.
The minister said the proposed parley has been approved by the Federal Executive Council.
“I do hope that it (the meeting) is held very soon because we cannot continue to carry the burden,” she said.
According to her, N1.774 trillion has been paid to independent oil marketers as petrol subsidy from 2013 to 2016.
“The total sum of N6.210 trillion was expended from PMS under-recovery by NNPC and payment to independent oil marketers from 2013 to 2021,” the minister said.
On the funding of subsidy payments for 2013 to 2016, she said: “Payments were directly from domestic excess crude account through the deduction of Sovereign Debts Instruments (SDI).
“They are negotiable short term instruments that were issued by the government in 2010 to enable marketers to access financial support from their banks for the importation of PMS (otherwise known as petrol).
“It is also important to note that we have instances where funds are transferred from the consolidated revenue fund to the domestic excess crude account for subsidy payments.
“For 2015, there was N31 billion. Again, in the same year, there was N106.1 billion transferred from the CRF (consolidated revenue fund) in another instance to the domestic excess crude account.
“In 2016, there was another transfer of N40 billion from the CRF to same account for the purpose of settling PMS subsidy to oil marketers.
“There was also the sum of N413.363 billion which was provided through short-term funding by the Central Bank of Nigeria.”
Ahmed said information provided by NNPC and the regulators was used for the assessment of subsidy, especially for 2023.
She added: “For 2023, the projection is that the average daily truck out will be N64.96 million litres per day.
“That is about 65 million per day, using an average open market rate of N448.20k 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 283.2.
“So, 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 N18.397 billion.
“So, if you are projecting for the full year from January to December, it will be N6.715 trillion.”
A lawmaker, Isiaka Ibrahim queried the rationale behind NNPC’s deduction of N1.66 trillion from source against N1.15 trillion paid to oil marketers in 2021, leaving an excess of N500 billion by fiat.
Chairman of the Committee, Rep. Aliyu Ibrahim queried the complicated formula for the computation of the fuel subsidy.
