Federal government plans to reduce fuel price

intern

May 3, 2016 9:03 AM

The new price would be based on the PPPRA pricing template, which is the major indicator and basis of the Federal Government’s Price Modulation Mechanism.

Nigeria's Oil Minister and OPEC president Emmanuel Ibe Kachikwu addresses a news conference after a meeting of OPEC oil ministers in Vienna, Austria, December 4, 2015.

The Federal Government says it would pay subsidy on Petrol; with funds already gotten from the recoveries of the first quarter of this year.

READ: FG to install trackers on fuel trucks

This information is contained in the latest Petroleum Product Pricing Regulatory Agency, (PPPRA) template released yesterday in Abuja. The PPPRA said between January and March, the Federal Government was able to save about N10 billion as a result of selling the product above the expected open market price.

READ: ‘Be patient with me,’ President Buhari begs Nigerians

According to the new template, the expected open market price of the Premium Motor Spirit, PMS, has risen to N99.38 per litre for independent and major oil marketers and N98.62 per litre for NNPC retail outlets.

The expected open market price, as revealed in that template, was the actual price of the product without subsidy and was based on the current exchange rate of N197 to a dollar. It said at the current price of N86 per litre at NNPC retail outlets, the Federal Government was paying N12.62 per litre as subsidy on the product and N12.88 per litre as subsidy for other oil marketers’ price of N86.50.

A breakdown of the template revealed that for NNPC retail outlets and independent and major oil marketers, the Landing Cost of PMS imported into the country was N84.32 and N85.08 per litre respectively, It stated that the distribution margin, which include retailers, transportation, bridging fund and dealers margin, among others, stood at N14.30 for both the NNPC and other marketers. According to the statement, this brings the current expected open market price to N98.62 and N99.38 for NNPC retail outlets and other marketers, respectively.

Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, during a visit to the Petroleum Products Pricing Regulatory Agency last month disclosed that from May 2016, the price of Premium Motor Spirit would be reviewed to go in line with current trends in the global petroleum industry.

Mr. Kachikwu stated that the prices review should have been done in April, but was suspended because the country had been able to save a lot of money within the first three months of the year; funds which will now be used to fund the gap recorded in pricing in April.

intern