Subsidy: Petrol Consumption drops from 66.9 million ltrs to 48.43 million ltrs in June – NMDPRA

Data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) reveals a notable 28% decrease in the average daily petrol consumption of petrol by Nigerians.

In June, the average daily petrol consumption dropped to 48.43 million litres, compared to the previous average of 66.9 million litres, according to figures released by NMDPRA.

However, Nigeria still lacks accurate data on its daily petrol consumption and relies on loading and truck-out information from depots to states nationwide, rather than the actual volume dispensed by filling stations to customers. Even the reported 28% reduction in consumption for June may not present the complete picture of Nigeria’s current petrol usage, considering the initial shock of the subsidy withdrawal announcement and the three-day holidays observed in June.

During these holidays, such as the annual June 12 Democracy Day and a two-day Muslim festival, oil marketers typically engage in minimal loading activities, potentially affecting consumption figures.

The precise figure for Nigeria’s petrol consumption remains a subject of controversy.

In September of last year, NMDPRA stated that Nigeria consumed 66.8 million litres of petrol daily, while the state-owned oil company, the Nigerian National Petroleum Company Limited (NNPC), insisted on a consumption rate of 68 million litres per day.

The removal of the subsidy, which had kept petrol prices low for decades in Africa’s largest economy, has proven to be beneficial for Nigeria.

The government spent $10 billion on the subsidy last year, leading to wider deficits and increased government debt. With the subsidy elimination, a black market in neighboring Cameroon, Benin, and Togo, which relied on smuggled petrol from Nigeria, has reportedly collapsed.

According to the World Bank’s estimation on June 27, Nigeria could save up to $5.10 billion this year by scrapping the petrol subsidy and implementing foreign exchange reforms, despite having already spent $2.41 billion on the subsidy in the first five months.

However, the conflicting figures presented by different government agencies have raised concerns among many Nigerians regarding the transparency of the management of the government’s expensive fuel subsidy program prior to its removal in May.

Addressing these concerns, the Nigeria Extractive Industries and Transparency Initiative (NEITI) has pledged to conduct a comprehensive nationwide study on the actual volume of petrol consumed by the country.

Meanwhile, the recent three percent increase in international crude oil prices may translate to a potential hike in petrol prices at the pump.

Currently, petrol sells for prices ranging from N488 to N600 across the nation, depending on the location.

The reduction in petrol consumption following the subsidy removal has brought significant environmental benefits. With lower petrol consumption, there is a reduction in greenhouse gas emissions, contributing positively to Nigeria’s efforts in combating climate change and improving air quality.

The shift towards more sustainable and environmentally friendly energy sources becomes crucial in promoting a greener future for Nigeria.