Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, has said that Nigeria’s freight rate on subsidised imported petrol had been increased to N20.46 per liter of gasoline from N10.46 per liter.
He explained that the decision to double the country’s freight rate is in a bid to help ease distribution challenge as global oil prices rise.
The Organisation of Petroleum Exporting Countries, OPEC, records Nigeria, Africa’s biggest economy and top oil exporter, has faced crippling fuel shortages in recent years, caused by the rise in oil prices, pipeline breakages, oil theft, dollar shortfalls, and disruptions by local unions and host communities.
Farouk did not however reveal how the new rate will be funded, given Nigeria’s already stretched finances and costly subsidy on petrol.
Nigeria subsidises imported petrol, which many in the country see as the only benefit for living in an oil-producing nation. The government tried to remove the subsidy in January but had to reverse course to placate unions.
President Muhammadu Buhari had announced that his government had suspended the subsidy removal and added $9.6 billion to planned spending to cover it, a cost that has risen as oil prices surge.
However, Nigeria does not subsidise jet fuel or diesel, whose prices have also soared. The diesel price has more than doubled in the past few months, stoking inflation.
The World Bank said last week it expected inflation in Nigeria to hit 15.5% in 2022, up from its November estimate of 13.5%. The bank added that the economy was being undermined by the increased cost of petrol subsidies and distortions in the exchange rate of the naira.