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Petrol May Soon Cost N240 Per Litre As NNPC Hints On Withdrawal Of Subsidy

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The federal government has disclosed that it currently subsidies cost of Premium Motor Spirit (PMS) with about N120 billion ($263,248 million) monthly.

the group general manager (GMD), Nigerian National Petroleum Corporation (NNPC), Mele Kyari, made the disclosure at the fifth edition of the Special Ministerial Briefings coordinated by the Presidential Communication Team.

He explained that the NNPC absorbs the cost differential which is recorded in its financial books.

Kyari, further explained that while the actual cost of importation and handling charges amounts to N234 per liter, the government is selling at N162 per liter.

He, however, said that the NNPC can no longer afford to bear the cost, adding that sooner or later Nigerians would have to pay the actual cost for the commodity.

Kyari said the NNPC pays between N100-120 billion a month to keep the pump price at the current levels, insisting that market forces must be allowed to determine the pump price of petrol in the country.

 

According to him, “Today, NNPC is the sole importer of fuel. We are importing market price and we are selling at N162 today. Looking at the current price situation, the market price could have been between that N211 to around N234 per litre.

“The meaning of this is that the consumers are not paying for the full value of the PMS that we are consuming and therefore the NNPC is bearing that cost. As at today, the difference is being carried in the books if the NNPC and I can confirm to you that the NNOC may no longer be in a position to carry that cost.

“That is why early last year, you will recall the full deregulation of PMS and we have followed this through until September when the price shifted above N145, disputes came up between us and the trade unions and the civil societies leading to an engagement between us and organised Labour which prevented the implementation of the actual price of the petroleum product as at that time.

“These engagements are continous and the objective of the engagement is actually not to prevent the implementation but to make sure there is sufficient framework on ground to ensure that consumers pay for the actual price of this product and that they are not exploited.

“Secondly, to also put some relief such that the potential effect of the fuel price increase are not transferred to the ordinary people. Part of this is to deepen the auto-gas programe.

“With auto-gas programme we will be able to deliver alternative fuel for vehicles including Keke Napep so that the price per liter equivalent will probably be half at its current price.

 

“So as we speak today, I will not say that we are in a subsidy regime but we are in a situation where we are trying to exit the underpriced sale of PMS until we come to the full value of the product in the market.

 

“We want to use this opportunity to tell you that PMS today sells above N200 across our borders and in some places about N500 to a litre. In some countries, the Nigerian fuel is their territory fuel and we are supplying almost everybody in the West African region.

 

“We cannot continue to afford this because we have our own issues. That’s why the eventual exit from this is completely inevitable. When that will happen I don’t know but I know that some engagements are going on; government is concerned about the natural impact of price increase on our transportation and other consumer aspects of our society.”

On the exact amount the NNPC is subsidising fuel months, he said,

“Our current consumption is about 60 million liters per day. We are selling at 162 to the liter. Current market price is 234. The difference between the two, multiply by 60million times 30, will give you the cost per month.

 

“This is a simple arrangement you do. If you want exact figures from our book, I do not have it for this moment but it’s between N100billion and N120billion per month.

 

“We are putting the difference in the books of NNPC and we cannot continue to bear.

“Today, NNPC is the sole importer of PMS. We are importing at market price and we are selling at N162 per liter today. Looking at the current market situation, the actual price could have been around N211 that you mentioned and around N234 to the liter.

“The meaning of this is that consumers are not paying for the full value of the PMS that we are consuming and therefore, somebody is bearing that cost. As we speak today, the difference is being carried in the books of NNPC and I can confirm to you that NNPC may no longer be in a position to carry that burden because we cannot continue to carry it in our books.

 

“That is why early last year, the full deregulation of the PSM market was announced and we have followed this through, until we got to September when oil prices shifted above N145, some social issues came up particularly with trade unions and civil societies leading to an engagement between us and organised labour which prevented the eventual implementation of the actual price of petroleum products at that time.

 

“Those engagements are continuing and the objectives of those engagement is actually not to prevent deregulation but make sure that there is sufficient framework on ground to ensure that consumers pay for the actual price of this product and they are not exploited.”

 

On his part, minister of state petroleum, Timipre Sylva dismissed insinuations that the Port Harcourt refinery is archaic.

On why the government is investing $1.5 billion on rehabilitation of Port-Harcourt Refinery when at the same time it is talking about privatisation and commercialisations, the minister said, “I have always said that our refinery cannot survive with the regime of subsidy; because you cannot be refining at a cost and selling at a subsidised rate.

 

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