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The upturn in global crude oil prices has pushed the landing cost of Premium Motor Spirit (petrol) imported into Nigeria to over N282 per litre.
The further rise in the landing cost of petrol means increased subsidy as the pump price of the product remains steady at N162-N165 per litre.
The landing cost of the product rose to N282.29 per litre on January 20 as the international oil benchmark, Brent crude, jumped to $89.75 per barrel that day from $77.24 per barrel on December 31, 2021.
Brent rose further on Wednesday to $90.22 per barrel as of 5.19 pm Nigerian time, its highest level since 2014.
The sharp rise in global oil prices to record highs has pushed the subsidy cost being incurred by the Federal Government.
The price of diesel, which is not regulated by the government, surged by 60 per cent in one year from an average price of N225 per litre in January 2021.
Diesel is mostly used by businesses, especially manufacturers, to power their generators amid a lack of reliable power supply from the national grid. Many vehicles transporting goods and people across the country also use diesel.
With daily petrol consumption put at about 60 million litres by the NNPC and a subsidy of N143.29 per litre, daily subsidy amounts to N8.60bn.
The rising price of crude oil pushed the cost of petrol quoted on Platts to $837.75 per metric tonne (N260.09 per litre, using the I&E rate of N416.33/$1) on January 20, 2020 from $754.75 per MT on December 31, 2021, with a freight cost of $26.77 per MT (N8.31 per litre).
Other cost elements that make up the landing cost include lightering expenses (N4.81), Nigerian Ports Authority charge (N2.49), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N2.17).
The pump price is the sum of the landing cost, wholesaler margin (N4.03), admin charge (N1.23), transporters allowance (N3.89), bridging fund (N7.51), marine transport average (N0.15), and retailer margin (N6.19).