Petrol may sell for less than N87 per litre, says NNPC
Following the new template that the Nigerian National Petroleum Corporation (NNPC) is working out with the the Petroleum Product Pricing Regulatory Agency (PPPRA), premium motor spirit (PMS), popularly called petrol, may sell for less thant N87 per litre next year.
Addressing journalists on the new framework in Abuja yesterday, the corporation’s Group General Manager, Corporate Planning and Strategy, Bello Rabiu, said that as at Thursday, the cost of bringing one litre of petrol to the country was N65. The logistics for bringing it to the depot and to the filling stations, he said, is about N10.55. The distribution cost is N15.49 while the open market as at today is N91.52/litre.
Continuing, Rabiu said: “Now, if you take away N87, which is regulated price, it means that subsidy is basically N4.85. If we are consuming 41 million litres, it means we are subsidizing N200 million a day.”
He dropped the hint that the cost is now reducing naturally because the present importation cost of N65 was N71 about three years ago and with the review, a new template would indicate that there is no need for subsidy in Nigeria.
In his analysis of how the Federal Government would reduce the cost of fuel importation, he said: “If we can look at this one that is N91.52 and we pray we can get about N15 off there, that will bring it down to a little more or less than N80. If we take off N10.50, we come down to N81. If we take it down to N7.52, we come down to N85.
“So you can see that the price we have today, if we look at the template can come down, and many Nigerians will believe that there is no subsidy.”
He added: “Looking at this cost of N91.52 per litre, you can see it is what has been in place since 2000 to 2002, which looks to have been over-inflated.”
He said that government is now planning to optimize the cost of fuel for the benefit of the citizenry.
The Group General Manager said: “So, looking at the template itself, another thing we are doing is how we can optimise that one.
“As nature will have it, the market itself is reducing the cost because three years ago, this N65 cost of bringing to Lagos was actually about N71. Now it has come down to N65 and it will go down again.
“So, if we actually optimise that template and reduce the template, that will reduce the total cost of import and there will be no subsidy in the country.”
The Nation however learnt from one of those developing the new frame work for the management of the PMS subsidy that there are strong indications that the pump price may go for about N82 per litre.
According to him, “the government has already seen the possibility of reducing the cost by an average of N10.”
But Rabiu disclosed that the new Petroleum Products Pricing Regulatory Agency (PPPRA) would release its new price template before the end of first quarter next year.
According to him, there is zero budget for fuel subsidy in the 2016 budget plan because the new adjustment that will lower the cost of product importation will make subsidy unnecessary.
He noted that there is no hope that the price of crude will rise in the next few years as Iran which had been on suspension will soon resume production.
He said that since the country has not been consuming up to the acclaimed consumption level it means that the Federal Government has been paying much more than what it should pay for subsidy.
“We are trying to ensure that we pay for only what the country consumes,” Rabiu submitted.
The Managing Director, Petroleum Pipelines & Products Marketing Company (PPPMC) Limited, Mrs Esther Nnamdi-Ogbue, dropped the hint that the “new price will be to the benefit of every Nigerian and there is no cause for alarm.”
Saying that Kaduna Refinery and Petrochemical Company will begin production today, she noted that the Atlas Cove and Mosimi pipelines are now functional while the PPMC is making efforts at operationalizing the line from Ibadan up to Ilorin.
At the moment, she said, the Federal Government produces seven million litres of PMS from local refineries.
The company’s boss said “the good news is that for the first time in the past 100 days, we have crude being pushed from Warri to Kaduna.
“We also have Atlas Cove Mosimi line working. Kaduna is ready to start up. I am sure by tomorrow (Saturday), we will start production from our refinery in Kaduna.”
She attributed the feat to the engagement of a private security guard company to carry out surveillance on the pipeline, adding that the partnership with the Department of State Security (DSS) has yielded positive results.
Her words: “It now reduces the burden of trucking all the way from coastal town to the hinterland. We also have efforts being made not only to Mosimi but to Ibadan and Ilorin, and that will also reduce a lot of tension.
“Why have we done that? We have brought in private security companies to guard our pipeline. Then, we had joint task-forces but we still had our lines being compromised.
“The security outfit that manages the pipelines has recorded success and quite a number of the vandals have been handed over to the security agencies.
“We also have collaboration with the DSS and this has also yielded great results.”
She said that between now and the end of the month, there are 12 vessels of products coming in with at least 30,000 metric tonnes each, stressing that there will be a ‘queueless’ Yuletide in the country.