: The Nigerian government recently announced that the volume of Premium Motor Spirit (PMS), commonly known as petrol, consumed in the first half of 2023 amounted to 11.26 billion litres. However, following the removal of petrol subsidy by President Bola Tinubu on May 29, 2023, PMS consumption saw a significant decrease of about 18.5 million litres daily in June. In this blog post, we will delve into the data provided by the Nigerian Midstream and Downstream Petroleum Regulatory Authority, exploring the impact of subsidy removal on petrol consumption in the country.
Pre-Deregulation Period: From January 1 to May 28, 2023, when petrol subsidy was still in place, Nigeria consumed approximately 9.9 billion litres of petrol. This translates to an average daily consumption of 66.9 million litres during the five-month period. These figures highlight the demand for petrol in the country before deregulation took effect.
Post-Deregulation Period: In the post-deregulation period, specifically from June 1 to June 28, 2023, petrol consumption in Nigeria totaled 1.36 billion litres, with an average daily consumption of 48.43 million litres. Comparing this to the pre-deregulation period, we observe a significant reduction of about 18.5 million litres in daily petrol consumption.
Fluctuations in Consumption: During the pre-deregulation days, there were instances where petrol consumption exceeded 100 million litres on certain days, while dropping below 10 million litres on others. However, the post-deregulation period saw a consistent consumption range, with figures remaining below 78.84 million litres throughout the 28-day period covered by the report. The highest consumption figure during this period was recorded on June 20, while the lowest was 470,000 litres consumed on June 11.
The Impact of Subsidy Removal: The removal of fuel subsidies has been a contentious issue, but proponents argue that it eliminates avenues for corruption and smuggling. Prof. Yinka Omorogbe, the President of the Nigeria Association for Energy Economics, acknowledged that while the removal of subsidies has had harsh impacts, it was a necessary step to address the negative practices associated with the subsidy regime.
The data on petrol consumption in Nigeria highlights the impact of subsidy removal on daily consumption figures. With a reduction of about 18.5 million litres per day, the post-deregulation period demonstrates a shift in petrol consumption patterns. While the long-term effects of subsidy removal remain to be seen, the move is aimed at curbing corruption and smuggling, ultimately promoting transparency in the petroleum sector. As Nigeria adjusts to the new era of petrol pricing, it will be interesting to monitor how consumer behavior and market dynamics evolve in response to these changes.
Punch.