Nigeria’s Phantom Petrol Consumption Rate has ‘Increased’ by 10.31 Million Litres in Five Months

A Dataphyte review of the Nigerian National Petroleum Company reports shows that petrol consumption figures as at August 2021 was 1.516 billion litres. 

This would mean the average daily consumption of petrol in the country as at August, 2021 stood at 48.903 million litres/per day. 

Consumption rates between January to August 2021 shows that the average daily consumption for the eight months stood at 55.39 million litres.

In January 2022, the daily consumption figures quoted by the country’s finance minister, Zainab Ahmed is 65.7 million litres daily. 

With the finance minister stating a figure of 65.7 million litres per day, it would imply that between the first eight-month period in 2021 (January to August)  and January 2022, the consumption rate increased by 10.31 million litres per day.

Disputed Consumption rate as NNPC  demand for N3 trillion subsidy fee

In January, the Nigerian National Petroleum Company demanded  a N3 trillion subsidy fund for the 2022 fiscal year. The demand was premised on a daily consumption rate of 65.7 million litres and an oil price peg of  $80 per barrel.

The House of Representatives revealed that it would probe the 65.7 million daily oil consumption of the country even as the Nigerian Labour Congress and governors express doubts on the accuracy of the figure.

In 2018, the National Bureau of Statistics was quoted as stating that Nigeria does not have an official figure on daily fuel consumption.

The daily rate of consumption determines how much will be spent on subsidy; and the bill for subsidy payments as presented by the NNPC has been subject to arguments on the authenticity of figures and subsequently the amounts spent on Subsidy.

Although the country’s minister of finance did not explain how the 65.7 million litres daily consumption was arrived at, the organization in the past revealed that it relies on figures provided by the Petroleum Products pricing regulatory agency (PPPRA).

Unharmonized Daily Consumption could expose the country to financial unaccountability

Who determines fuel consumption rates and how that figure is determined may be a loophole for financial foul play, given the role the metric plays in determining the amount spent on subsidy. The cons of Nigeria’s subsidy regime has been well reported, and alongside its weight on the country’s revenue generation and availability of funds for developmental purposes, the biggest criticism is the avenues for corruption that it presents.

How are Fuel Consumption Rates Determined?

There is no known methodology for determining fuel consumption rates in the country, in fact the National Bureau of Statistics not only said they do not have the data, they also went as far as saying whatever numbers being bandied around are likely incorrect. 

Number of cars alone will not suffice although cars are one of the country’s top 10 imports. According to the National Bureau of Statistics, in 2018 the vehicle population of the country stood at 11.8 million. However, this figure has likely increased as the numbers of vehicles imported into the country between 2018 and 2020 hit an expenditure figure of  N1.09 trillion in 2020. 

However, beyond vehicles, Nigerians likely spend as much on fuel for cars as they do on generating power because they rely on fuel for other activities, chiefly power generation in the face of poor electricity supply in the country. The diesel genset market alone is set to reach $806.8m by 2030.

The NNPC has not provided any methodologies on how they arrive at the fuel consumption rates used to determine the subsidy bill it presents to the government. Even within interconnected petroleum agencies, they can’t seem to agree on the consumption figures. For instance, in 2020, the Department of Petroleum Resources put the fuel consumption figure at 38 million litres daily when the Ministry of Petroleum Resources put it at 52 million litres daily consumption. 

Contestable fuel consumption figures subject the amounts claimed as spent on subsidy as well as the amount declared as revenue to distrust, especially in a country like Nigeria with endemic corruption. Overstated consumption figures, overstated or understated revenue figures and huge subsidy bills are all harmful to the country’s fiscal balance especially with increasing budget deficits and the need to generate more revenue.

In the NNPC report,  in the period from August 2020 to August 2021, petroleum sales stood at 19.99 billion litres. N2.613 trillion revenue was made from the sale of petroleum motor spirit, popularly called petrol.