The Independent Petroleum Marketers Association of Nigeria (IPMAN) has indicated that the country’s monthly expenditure on fuel subsidies may exceed N700 billion.

This projection was made by Mohammed Shuaibu, the Secretary of IPMAN in Abuja-Suleja, in a statement released on Monday.

Shuaibu’s comments followed the disclosure of data by the Major Oil Marketers Association of Nigeria (MEMAN) last Wednesday, which revealed that the landing cost of petrol was N1,117 per liter as of the previous day.

Shuaibu challenged the accuracy of the figures provided by the Nigerian National Petroleum Company Limited (NNPC) and the Nigerian government regarding fuel subsidy expenditures.

He expressed concern that the official figures might not fully reflect the true cost of the subsidy. “Petrol prices are influenced by global supply and demand factors,” Shuaibu stated.

“When international prices rise, it affects Nigeria as well. The NNPC, which is the sole importer of petrol, may not be transparent about the actual costs.”

According to Shuaibu, the substantial discrepancy between the reported landing cost of N1,117 per liter and the lower ex-depot price of N585 per liter, set by the NNPC, underscores the potential scale of the subsidy.

He warned that this discrepancy suggests the monthly subsidy expenditure could be well over N700 billion. This situation implies that Nigerians should brace for possible increases in fuel pump prices.

In contrast, Heineken Lokpobiri, the Minister of State for Petroleum Resources, has consistently maintained that the fuel subsidy program has been removed.

However, further analysis supports Shuaibu’s concerns. With petrol prices ranging between N617 and N750 per liter, depending on the location, the ex-depot price of N585 per liter results in a subsidy of N532 per liter.

Given that the Federal Ministry of Petroleum Resources reported a daily consumption of 44.3 million liters in October 2023, this amounts to an estimated daily subsidy cost of N23.57 billion. Over a month, this totals more than N700 billion.

This issue comes at a time of ongoing tension between the Dangote Refinery and the Nigerian Midstream and Downstream Petroleum Regulatory Authority over concerns about substandard petroleum products.

Additionally, recent comments from former Kaduna State Governor Mallam Nasir El-Rufai suggest that the current administration, led by President Bola Tinubu, may be spending more on fuel subsidies compared to previous administrations.

Trade Union Congress President Festus Osifo has also hinted at the possibility of a quasi-subsidy being applied to petrol prices, adding to the complexity of the situation.