Payment on Fuel Subsidy Increases

Farouk Ahmed, executive secretary, PPPRA


THE federal government has said that the amount payable to oil marketers as subsidy on petrol has risen by more than 1,142 percent in the past seven weeks. The information obtained from the Petroleum Products Pricing Regulatory Agency, PPPRA, website showed that the amount payable as subsidy on the product was now N35.28 per litre.

The PPPRA puts the current landing cost of the product at N106.79 per litre; while the total cost, comprising landing cost and distribution margin, was put at N122.28. However, the product still sells for the regulated price of N87 per litre at filling stations across the country. Components that make up the landing cost include cost and freight, N95.23; traders’ margin, N1.47; lightering expenses, N4.16; NPA charge, N0.77; financing, N1.37; jetty depot thorough put charge, N0.80; and storage charge, N3.00.

The distribution margin is made up of retailers, N4.60; transporters, N2.99; dealers, N1.75; bridging fund, N5.85; marine transport average, N0.15; and administration charge, N0.15.

As of February 27, this year, the federal government was said to be incurring N1.38 billion as subsidy on petrol consumed within the country on a daily basis at a rate of N34.51 per litre. Figures from the Pipelines and Products Marketing Company, PPMC, a subsidiary of the Nigerian National Petroleum Corporation, NNPC, showed that 40 million litres of petrol are consumed daily in the country; translating into a daily subsidy of N1.38billion on the product at N34.51 per litre.

The PPPRA had put the product cost and freight elements of imported petrol at N94.46; with other cost items like traders’ margin, lightering expenses, NPA, financing, jetty depot through put charge, and storage charge put at N1.48, N4.16, N0.78, N1.34, N0.80, and N3.00, respectively. The landing cost for petrol then, according to the agency, was N106.02.

The PPPRA also pegged the various distribution margins for retailers, transporters, dealers, bridging fund, marine transport average, and administrative charge at N4.60, N2.99, N1.75, N5.85, N0.15, and N0.15, respectively. The open market price of petrol as of that date, according to the agency, was N121.51.

Avoid Estimated Bills, Buy Prepaid Meters – EKEDC

THE Eko Electricity Distribution Company, EKEDC, has urged customers to buy prepaid meters under the Credit Advance Payment for Metering Implementation, CAPMI, scheme introduced by the Nigerian Electricity Regulatory Commission, NERC, to curb estimated billings. Oladele Amoda, chief executive officer, EKEDC, said his company had embarked on gradual elimination of estimated billings through in-house metering and CAPMI projects.


“We know that several customers are not metered and we have started metering customers. We have metered about 3,000 customers and we are currently expecting meters for key customer group called maximum demand customers.  We have spent $15 million on the project; we have committed ourselves, while the small commercial/residential customers will gulp N20 billion. We want to eliminate estimated billings gradually. Customers should advance money to the distribution companies by subscribing to CAPMI to get prepaid meters. If a customer pays, he will be metered within 45 days. We want to migrate everybody to smart meters. We plan to change all the non-functional meters to smart meters. We will also replace all the prepaid meters but those who cannot wait should subscribe to CAPMI to avoid estimated billings,” he said.

Amoda noted that the Transmission Company of Nigeria, TCN, has not been funded properly enough to evacuate power that was being generated, adding that EKEDC would partner TCN to provide funding to enable the transmission company to execute projects it were not able to execute. “We will recover our money later but we have to assist them financially so as to help our customers.”

Amoda said the capital expenditure of EKEDC in 2015 was about N18 billion, adding that the new investors were not focusing on making profits but how to upgrade the network to improve power supply. “We record a drop in revenue because people feel that they should not be paying for power. There is increase in energy theft. There were instances where the revenue did not cover the power we were allocated and that is the problem with most distribution companies,” he said.

According to Amoda, the new investors had reduced technical losses from 35 percent to 29.4 percent, adding that it will be reduced to 10 per cent in the next five years. On the accomplishments of the new investors since they took over in November 2013, Amoda said that more than 200 No new distribution transformers and 3No. 15MVA 33/11KV power transformer had been installed. The company had constructed 10Nos 33KV new feeders and several 11KV feeders in various locations.

Amoda identified vandalism as a major challenge, saying that incessant vandalism has led to drop in power supply. He identified the other challenges to include energy theft and meter by-pass, non cost-reflective tariff, shortfall in generation and transmission interface issues.

— Mar. 30, 2015 @ 01:00 GMT


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