Nigeria’s daily consumption of Petroleum Motor Spirit (PMS) has dropped by a drastic 92% following the removal of the petroleum subsidy by the Federal Government.
Background
According to data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, Daily Truck Out Report obtained by Channels Television, it was revealed that as of August 20, 2024, petrol consumption dropped to 4.5 million litres per day in contrast to the 60 million litres per day consumption recorded in May 2023 before President Bola Tinubu’s inauguration.
The report also revealed that out of the 36 states of the federation, only 16 states got product allocation from the Nigeran National Petroleum Company Limited (NNPCL) in the month under review which meant that the 20 states that did not get allocation in September suffered scarcity.
A breakdown of how the NNNPCL distributed the products among the 16 states, showed that Niger got the highest allocation of 21 trucks, amounting to 940, 000 litres daily, Lagos got the second highest of 12 trucks amounting to 726, 001 litres, and Kaduna got 12 trucks of 454, 001 litres.
Oyo got 12 trucks of 454 litres, Kano 9 trucks, Ondo 6 trucks, Kwara 6 trucks, Edo 4 trucks, and FCT 4 trucks.
The likes of Sokoto state received 4 trucks from the NNPCL, Ogun state got three trucks, Osun three, Gombe one, Benue one, Ekiti one and Kebbi, one truck.
Fuel Subsidy Removal
On assumption of office in May 2023, President Bola Ahmed Tinubu announced the removal of petroleum subsidy stating that the fuel subsidy was not sustainable due to the amount of money spent yearly to sustain subsidy.
He noted that the trillions of naira yearly spent to sustain the subsidy would instead be channeled towards making other sectors like the healthcare and transportation sector, schools, housing, and national security, among others better. Tinubu had also stated in his nationwide broadcast that the money was being funneled into the deep pockets and lavish bank accounts of a select group of individuals.
Immediate Implications of the Fuel Subsidy Removal
The announcement of the fuel subsidy removal by President Bola Tinubu was immediately followed by a surge in petrol prices nationwide. By the evening of May 29, 2023, prices had risen to N500, up from around N198, or slightly more in some areas.
This adjustment in fuel prices also led to an astronomical hike in the price of transportation nationwide.
In the over one year since the removal of the fuel subsidy by the federal government, the price of PMS nationwide has further increased by over 100 per cent, as petrol now sells for between N998 and N1,100 and even N1,200 at some fuel stations.
The policy and the floating of the naira sharply led to a rise in the cost of commodities in Nigeria, pushing essential items beyond the reach of millions of people across Africa’s most populous nation and by September 2024, the high petrol price had pushed inflation to 32.7 per cent.
PMS Availability and Unaffordability Issues
Despite the high cost of the petrol, availability has been an issue, with queues snaking into major roads and streets, thereby becoming a regular feature across filling stations in Nigeria.
The period after the removal of the fuel subsidy by the president saw Nigerians go through a lot of discomfort due to the nationwide unavailability of PMS. Many Nigerians could be seen going in search of petroleum in different fuel stations across the country, motorists went through unpleasant ordeals trying to get fuel, citizens had to trek long distances due to unavailability of means of transportation, while some industries having to shut down operations due to the unavailability of PMS.
As petroleum products became more available, it became unaffordable to a large segment of the Nigerian population. In early October, retail stations of NNPC raised the price of petrol to N1,030 from N897/litre in Abuja, and to N998/litre from N868/litre in Lagos, following suit, other locations witnessed similar price hikes.
This latest hike made PMS unaffordable to most Nigerians, hence the latest decrease in the daily consumption of PMS in Nigeria.
Significance of the Drop in Daily Consumption of PMS
The data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, seem to convey mixed implications for the Nigerian economy.
On the one hand, the reduction in the consumption of PMS is a key indicator that Nigerians might just be onboard the FG’s drive to migrate from PMS to other renewable and cleaner energy alternatives like the Compressed Natural Gas (CNG).
However, the drop in PMS consumption figures point to a deeper lying issue with the current economic capacity of most Nigerians who are now too ‘poor’ to be able to afford fuel. Arbiterz had earlier reported that the World bank in its recent economic outlook on Nigeria,2024 stated that about 129 million Nigerians currently live below the global poverty line, a situation which is in no measure palatable.
There is also the case of the NNPC’s ability to supply PMS to every state of the federation, only supplying to 16 states in September which caused PMS scarcity in the remaining 20 states that did not get any petroleum allocation.
It is left to be seen if the daily consumption of PMS would improve by the time the next Daily Truck Out Report is published or if the consumption figures would continue its freefall under the administration of President Bola Ahmed Tinubu.
