Subsidy: Nigeria imported 23.5bn litres of PMS in 2022 – NMDPRA

In 2022, Nigeria imported a total of 23.5 billion litres of Premium Motor Spirit (PMS), as disclosed by Mr. Farouk Ahmed, the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

During an 8-year period, the average daily distribution of PMS via trucks amounted to over 55 million litres per day, with a peak of 66.7 million litres recorded in 2022.

Ahmed who made the disclosure at the 2023 PENGASSAN Energy Labour Summit in Abuja said the subsidy regime in Nigeria created a situation where a substantial regional PMS retail pricing differential incentivised increasing cross-border smuggling.

“The financial implication of PMS subsidy rose to over N400 billion monthly which translates to over N4.8 trillion (US$6bn) annually making it unsustainable in the short to medium term.

“Subsidy on PMS hugely impacted Government revenues available to all tiers of Government leading to the inability of the Government to meet their obligations,” he said.

He explained that fuel had over the years encouraged inefficiency, waste and environmental pollution adding that these were major bottlenecks to aligning to 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% of Fiscal Budget for the year, presented a strain on the fiscal viability of the government, and 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 that will promote transparency, and private sector investment in the downstream value chain of Nigeria’s Oil and Gas sector.

Similarly, he assured that the Authority would accelerate the issuance of all regulatory instruments required to deepen the utilization of gas resources.

“The Auto-gas and domestic LPG programs are also being implemented for deepening the utilization of gas in a manner that supports the availability of cheaper and cleaner alternative energy sources for Nigerians.

“These programs have a direct linkage 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,” he added.

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