Govt’s daily fuel subsidy bill hits N632.8 million

•Oil prices rise to $62 a barrel  

AS the prices of crude oil at the international market got close to its 2015 high Tuesday, rising to $62 a barrel, the Petroleum Products Pricing Regulatory Agency (PPPRA) has increased it price template for fuel to N15.82k per litre.

  With this latest development, subsidy burden on the government have increased to over N632.8 million daily as the nation consumes about 40 million litres per day.

  This is the highest subsidy on price per litre of fuel since the Federal Government reduced the pump price from N97 to N87 per litre.

  Brent crude rose by 65 cents to $62.05 a barrel Tuesday. US crude was 60 cents higher at $53.38 a barrel. 

 As at yesterday, the landing cost, including cost and freight, traders margins, lightering expenses, Nigerian Port Authority, financing, jetty depot to port charge and storage at N87.33 per litre.

  Oil prices collapsed in the second half of 2014 on oversupply. The Organization of the Petroleum Exporting Countries refused to cut its output, choosing to defend market share against US shale oil and other competing sources. 

  Brent has jumped by almost 40 per cent in the last four weeks, supported by a sharp fall in US oil drill.  

  The recent rise in the prices of crude oil means that the Federal Government will also continue to increase its subsidy payment on the price of fuel per litre.

  For example, early this month, the government increased subsidy per litre from N10 to N12.27  

  The Federal Government had on Sunday, January 18, announced the reduction in the pump price of petrol by N10 from N97, attributing this to the decline in global crude oil prices.

  Again, about five days ago, the PPPRA increased its subsidy from N12 to N14.79 per litre.

  With this latest development, subsidy burden on the government may be over N487 million daily as the nation consumes about 40 million litres per day.

  Meanwhile, the US is likely to become self-sufficient in oil by the 2030s, having imported about 60 per cent of its total demand as recently as 2005, according to the latest BP report. 

  The report released yesterday said that the U.S is expected to become a net oil exporter “over the next few years”, causing a dramatic shift in trading patterns as the flow of international crude sales moves increasingly from west to east.

 “The current weakness in the oil market, which stems in large part from strong growth in tight oil production in the US, is likely to take several years to work through,” the  report said.

  BP dismisses hopes the shale revolution that has curbed US demand for imported oil and gas could spread to other countries such as Britain, Russia, China and Argentina, seen by some as possible areas for development.