Fuel subsidy and the daily petrol consumption rate in Nigeria

How much petrol is consumed daily in Nigeria? The NNPCL and The National Bureau of Statistics (NBS) do not know. Neither does the Ministry of Petroleum Resources nor the Ministry of Finance. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) does not know. Nobody in the Nigerian government seems to know how much petrol is consumed daily in Nigeria. Every agency has its own estimated daily PMS national consumption rate. Yet, the amount of implicit fuel subsidy paid is based on the daily volume of PMS consumed and the difference between the implicit cost of importing the PMS and its actual price at the pump. Padding the daily PMS consumption rate is the foundation of the cesspool of corruption that constitutes the fuel subsidy regime.

The daily PMS consumption rate was less controversial and more reliable prior to 2011. The daily PMS consumption rate was 21.45 million litres in 2002,  21.72 million litres in 2003 and 25.91 million litres in 2008. It was 26.74 million litres and 29.81 million litres in 2009 and 2010 respectively. In February 2020,  after a detailed study, the DPR  concluded that the national daily PMS consumption rate was 38.2 million litres. Thus, the best indicators of the daily PMS consumption rate can be obtained from the 2002-2010 trend with the February 2020 DPR rate as a control. The daily consumption rate from this trend eliminates the corrupt padding of daily PMS consumption rate data after 2010.

In 2011, the average daily PMS consumption rate was 29.3 million litres, while the government paid a subsidy of N2,110 billion based on an estimated daily PMS consumption rate of 56.9 million litres. The government claimed that the difference of 27.6 million litres per day was smuggled to neighbouring countries. However, this difference was due to companies making false subsidy claims on undelivered fuel. These corrupt practices were revealed by the 2012 Farouk Lawan House of Representative Ad-Hoc Committee investigation and report. The committee found deliberate neglect for record keeping, payments for billions of litres that were never supplied, and more than $6.8 billion in refunds due to the Treasury. The Federal government’s Aigboje Aig-Imoukhuede committee indicted 25 companies for overpayments of $2.5 billion and questioned an additional $1.5 billion worth of transactions. In 2012, N1,360 billion was paid as a subsidy based on the importation of 43.1 million litres of PMS per day. But, the daily PMS consumption rate was 30.3 million litres. The remaining 12.8 million litres per day of PMS was never delivered.

Subsidy payments of N1,320b were made in 2013 on the basis of a daily PMS consumption rate of 48.1 million litres. However, the daily PMS consumption rate was 31.3 million litres, leaving a 16.8 million litres per day discrepancy due to corrupt padding. In 2014 and 2015, OPEC data from the Ministry of Petroleum Resources showed daily PMS consumption rates of 45.1 million litres and 48.7 million litres respectively. However, subsidy payments of N1,220 billion and N654 billion were made on daily PMS consumption rates of 52.0 million litres and 51.8 million litres for 2014 and 2015 respectively. The daily PMS consumption rates were 32.4 million litres in 2014 and 33.5 million litres in 2015. The figures from the Ministry of Petroleum Resources, NNPC and other MDA were padded for corruption purposes.

The falsification or padding of daily PMS consumption rate data for corruption purposes continued unabated during the 2016 to 2023 period. In November 2016, the NBS claimed that 51.9 million litres per day of PMS were consumed in the first 9 months of the year. The NNPC, on the other hand, claimed that 47.6 million litres of PMS a day was consumed. Subsidy payments of N240 billion were made. The daily PMS consumption rate in 2016 was 34.6 million litres. 

The difference of 13.1 million litres per day was the padding of import data and never delivered. In 2017, the PPPRA used 55 million litres a day for fuel subsidy payments of N154 billion. OPEC/NNPC data was a daily PMS consumption rate of 50.2 million litres. The daily PMS consumption rate in 2017 was 35.8 million litres. The difference of 19.2 million litres per day was the padding of import data and never delivered. In 2018, the NNPC confirmed that it has “no confirmed data or statistics on fuel consumption in the country.  Corporation relies on figures provided by PPPRA”. 

The PPPRA assumed a daily PMS consumption rate of 53.6 million litres for subsidy payments of N1,190 billion. The daily PMS consumption rate in 2018 was 37.0 million litres. The difference of 16.6 million litres per day was padding of import data and never delivered. 

An NBS spokesman declared, “At the moment we (NBS) do not have any reliable data on fuel consumption yet”. In order to determine the actual PMS daily consumption rate, the DPR commissioned a new technology called the Downstream Remote Monitoring System (DRMS), aimed at checking illegal activities in the downstream sector and providing accurate data.

In October 2019, PPPRA reported a daily PMS consumption rate of 57.2 million litres for subsidy payments of N508 billion. The rate was so high that the NNPC set up the automated Downstream Operations and Financial Monitoring Centre (DOFMC) to determine the actual national PMS daily consumption rate. Subsidy payments of N508 billion were made in 2019.

The daily PMS consumption rate in 2019 was 38.2 million litres leaving a difference of 19 million litres a day due to padding and corrupt practices. The Ministry of Petroleum Resources put the daily PMS consumption rate in 2020 at 52 million litres for subsidy payments of N864 billion. The daily PMS consumption rate in 2020 was 39.4 million litres.

In 2021, the NNPC stated that “import in the year 2021 was 22.35 billion litres, which translated to an average supply of 61 million litres per day”. Subsidy payments of N1,430 billion were made. The daily PMS consumption rate was 40.7 million litres. The NNPCL falsely claimed that the difference of 20.3 million litres per day was smuggled to neighbouring countries. We have shown that there is little or no smuggling of Nigerian petrol to neighbouring countries. This is just an IMF myth that is not supported by the petrol input-output data of these nations.

In January 2022, the Minister of Finance, Zainab Ahmed, declared that the daily PMS consumption rate was 65.7 million litres. The NNPCL stated that the average daily PMS supply from January to August 2022 was 68 million litres based on truck-out data. But, the daily PMS consumption figure was 42.0 million litres.

The Minister of State for Petroleum Resources, Timipre Sylva, argued that PMS smuggling was responsible for the discrepancy in data from different government sources. He stated, “The imported products come to Nigeria, and from there filter out of our borders to neighbouring countries. We are inadvertently subsidizing the whole of Africa.”

But, smuggling the difference of 26 million litres per day across our national borders implies that 788 PMS tankers with 33,000 litres capacity illegally crossed the borders daily. This does not make much sense. It is more likely that the daily PMS consumption rates data are being falsified and padded to enable the stealing of public funds under the guise of subsidy payment. The YTD daily PMS consumption rate as of April 7, 2023, was 65.9 million litres according to the NNPCL. The actual daily PMS consumption rate was definitely lower at about 43.3 million litres.

We have shown that the difference between actual daily PMS consumption rates and the inflated or padded daily PMS consumption rates used for subsidy payment most likely captures the extent of corrupt practices in the subsidy regime rather than PMS smuggling to neighbouring countries.

This is probably why the Minister of State for Petroleum Resources, Timipre Sylva, said, “At this rate, I have said if anyone is looking at a criminal enterprise, look no further than the fuel subsidy,”. However, the government cannot fight corruption in the subsidy regime by increasing PMS prices. It should know how many litres of PMS are actually consumed in Nigeria daily.

All offshore/onshore export/import terminals, special purpose vessel storage, loading and discharging jetties, product depots, tank farms, production facilities and flow stations should have certified dynamic flow meters such as Positive Displacement meters, Turbine meters, Ultrasonic flow meters, Coriolis meters and Differential Pressure meters.

The DPR clearly stated this in its 2019 “Procedure Guide for the Determination of the Quantity and Quality of Petroleum and Petroleum Products in Nigeria”. If this guide is updated and implemented rigorously with the aid of the latest Supervisory Control and Data Acquisition (SCADA) system, existing refineries are repaired and more refineries built, there will be no need for a PMS price hike under the guise of fuel subsidy removal.

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