Fuel subsidy removal attracts 30% drop in consumption – Report
By Felicia Nwosu
Data provided by Kpler, a data and analytics energy information tracking firm, has shown that the ripple effect of subsidy removal has caused Nigeria’s consumption and demand for Premium Motor Spirit (PMS) to drop by 30 percent. It further explained that the low full consumption pattern propelled by the subsidy has exerted pressure on European refiners. According to the report, average monthly West African (WAF) gasoline imports fell by 56 per cent in the second quarter compared with the first.
The analytics firm said this outcome has raised concern for European Refiners, as Nigeria remains one of its major outlets. It pointed out the implication of the crash in Nigeria’s domestic fuel consumption as one which will equally reduce refining margins for European refiners.
Kpler noted that European exports to Nigeria decreased by around 160,000 barrels per day in July compared to May, which was around 250,000 barrels per day. It also revealed that the removal of the fuel subsidy to the Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA) has led to a 35 per cent drop in average daily petrol consumption in Nigeria.
According to Kepler’s analysis, across West Africa, Nigeria accounts for a huge percentage of Europe’s petrol export market, where North America has traditionally been the main destination for European exports.
Other reports also indicated that the removal of government subsidies has also decimated the black markets for the commodity across neighbouring countries such as Cameroon, Niger, Benin, and Togo.
Although some business analysts have said that the 30 per cent drop off in fuel consumption is very important for the country’s balance of trade and payments while urging the government to resolve this by boosting foreign exchange supply in the short/medium term.
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