The Federal Government of Nigeria petroleum daily spending on petrol subsidy has dropped from the N2.4 billion it recorded in June to N1.07 billion as at Monday this week.
Specifically, the country’s daily petrol subsidy per litre of fuel has decreased from the N51.61per litre it recorded on June 11 to N22.42 per litre.
The Nigeria Petroleum Products Pricing Regulatory Agency (PPPRA), which made this disclosure on Monday in its pricing template , put the expected open market price of the product at N109.42.
Based on daily petrol consumption of 48 million litres, the total subsidy cost on the product as of September 7, would amount to N1.07 billion at N22.42 per litre.
The landing cost of Premium Motor Spirit (PMS), otherwise known as petrol, has also dropped from N123.12 per litre to N93.93, while the Expected Open Market Price declined fromN138.61 per litre N109.42.
Subsidy refers to the money paid by the government, to keep prices below what they will otherwise be in a free market system.
Nigeria, which relies on importation for most of its fuel needs as the country’s refineries are in a poor state, has seen a drop in importation of refined petroleum products in recent months, leading to acute scarcity of the products across the country.
Nigeria export all its crude oil produced and has not been earning much since the decline in prices.
The global benchmark Brent crude lost almost half of its value since June last year, plunging below $40 per barrel.
September West Texas Intermediate (WTI) crude oil futures fell by 2.23 per cent and were trading at $44.15 per barrel on Monday, in the electronic session in NYMEX.
Prices fell due to oversupply concerns and economic growth concerns across Europe and China.
Chinese crude oil imports fell by 13 per cent in August 2015, compared to August 2014—to 26.59 million tons.
The slowing Chinese demand for crude oil in the oversupplied market will continue to fuel pessimistic sentiments in the crude oil market.