The Nigeria National Petroleum Corporation (NNPC) continues to subsidise the pump price of petrol by over 60 per cent of the regulated N145 price per litre, Pan-African lender, Ecobank ,said in a report yesterday.
Ecobank Research, the research department of the bank, said in the report that while the recovery of crude oil price was positive for Nigeria, the downside was the resulting higher prices for refined products.
The report tagged "2018 Nigeria Downstream market outlook," said the landing cost of petrol at prevailing market exchange rate was already higher than the retail price but NNPC continues to absorb the difference between the landing cost, meaning that the corporation is essentially subsidising petrol without paying any subsidy to marketers.
"Going by the last published PPPRA gasoline pricing model and our estimation of the current landing cost of gasoline, we believe the NNPC continues to subsidise the pump price by over 60% of the regulated price of NGN145/litre."
The report found that the price of petrol in Nigeria remained the lowest among neighbouring countries with active land borders.
"Price difference between Nigeria and its neighbours which at the beginning of 2017 ranged between 52.78 per cent and 123.75 per cent has increase to a range between 123 per cent and 189 per cent."
It noted that the mismatch in price continues to create an avenue for informal petrol traders to get high return on products imported into Nigeria.
The report found that Nigeria's petrol price the lowest in all sub-Saharan Africa even at N145 per litre in 2017.
"The price difference further shows the level of intrinsic subsidy in the form of lower government agencies fees, infrastructure levies and most importantly lower exchange rate absorbed by NNPC. We estimate the full reflective pump price of PMS to be at least 50% higher than the current price."