Petrol will sell for N86.50 per litre at filling stations belonging to major and independent oil marketers, while it would sell for N86 at all retail stations belonging to the Nigerian National Petroleum Corporation (NNPC) from January 1, 2016, the federal government has finally announced.
The new price was announced in Abuja yesterday by the executive secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Farouk Ahmed.
The minister of state for petroleum, Dr. Ibe Kachikwu, had on Christmas Day stated that the pump price of petrol would sell below N87 a litre following a price modulation being done.
Consequently, Ahmed explained that the price difference between NNPC retail stations and other marketers is due to the difference in their various arrival costs, occasioned by the financing aspect. He said while the arrival cost for other marketers is N86.29, NNPC’s arrival cost is N85.93, adding that “the ideal is to prevent NNPC from profiteering since it imports at a lower cost.”
According to him, the new pump price follows a review of the components of the petroleum products pricing template, taking into cognisance the current market trend which was subsequently approved for implementation by the minister of state for petroleum.
Ahmed explained that the components of the pricing template affected by the review are the traders’ margin, lightering expenses, Nigerian Port Authority (NPA) charges, jetty throughput, storage charges, bridging fund as well as retailers, transporters and dealers’ margin.
He pointed out that the review of the template became necessary in order for it to be sensitive to the price in the market, noting that the template has largely been the same since 2007 except for some minor adjustments, despite changes in the market components.
The breakdown of the revised prices of the components in the new template shows that traders margin have been reduced from N1.47 per litre to zero Naira, lightering expenses from N4.07 to N2.00, NPA charges from N0.77 to N0.36, Jetty throughput, N0.80 to N0.40 and storage charges, N3.00 to N1.50.
Others are retailers’ margin reviewed from N4.60 per litre to N5.0 per litre, transport, N2.99 to N3.05, dealers’ margin, N1.75 to N1.95 and bridging fund reduced from N5.85 per litre to N4.00 per litre, bringing the ex-depot price per litre of petrol to N77 down from the current N77.66.
“All marketers are hereby advised to adhere strictly to the PPPRA-approved ex-depot and pump prices as the PPPRA, in conjunction with relevant government agencies, shall enforce compliance,” Ahmed said.
He added that the new prices are not static but subject to quarterly reviews depending on the market trend, just as he revealed that a product advisory committee will be set up by the minister of state for petroleum to advise the PPPRA on price changes.
While noting that 40 million litres daily national consumption was retained in the review, he pointed out that the marketers are aware that the template review had been on and that the review was necessary to update some elements in the pricing which dates back to 2007.
Meanwhile, the NNPC has been granted 78 per cent of the total allocated volume of three million metric tonnes of petrol for the first quarter (Q1) of 2016, while other oil marketers will import the balance of 22 per cent.
Ahmed said: “In allocating the Q1 2016 import quota to the NNPC and other marketers, the agency took into consideration retail outlets ownership, marketers’ performance of previous quarterly allocation as well as the challenges in sourcing foreign exchange. This measure is to guarantee uninterrupted fuel supply nationwide.
“Marketers are required to note that there shall be a mid-quarter review of performance where volumes of non-performing marketers shall be withdrawn and reallocated to performing marketers.”
He reiterated that the consideration for participation in future allocations shall be on the basis of attainment of 100 per cent performance in Q1, 2016, warning that any marketer found selling above the approved price would be excluded from future participation in product importation and revocation of licences, amongst other sanctions.
NLC begins mobilisation against removal of fuel subsidy
The Nigeria Labour Congress (NLC) has said it will resist any removal of fuel subsidy through the back door.
The union, in a statement signed by its general secretary, Dr. Peter Ozo-Eson, reiterated its directive to state councils and industrial unions to commence the process of mobilization prior to a meeting of the national executive committee to be convened in the New Year.
“In the past few weeks, we have heard discordant tunes from government officials and chieftains of the ruling APC on what the future portends for the prices of petroleum products and the management of the subsidy scheme.
“Party chieftains who supported and encouraged the massive protests against subsidy removal in 2012 are now preaching the inevitability of subsidy removal!
“The minister of state for petroleum first announced that, come next year, the price of petrol will revert to N97 per litre and that subsidy will be phased out. Two days, thereafter, he denied this and stated that what he said was that the price will operate within a band of N87 to N97 and that this did not mean removing the subsidy. The same minister now says that the price of petrol will now be N85 in January signifying the deregulation of the sector.
“These vacillations and flip-flops are, in our view, designed to confuse Nigerians and pave the way for the deregulation of petrol prices through the back door. The fact of the matter is that as long as we continue to depend on imported refined products, deregulation and the abandonment of a subsidy scheme will unleash hardship on Nigerians.
“In any case, according to our laws, the determination of the recommended prices of petroleum products is the responsibility of the Petroleum Products Prices Regulatory Agency (PPPRA). By law, the board of PPPRA is made up of stakeholders. None of the contradictory prices the minister is throwing up is a product of the agency. Indeed, the board of the PPPRA has not operated for over two years although we have made repeated demands for the convening of the board.”
The urged the government to abide by the rule of law and constitute and convene the board of PPPRA without further delays.
According to the labour centre, such will enable the agency to examine and agree on new pricing template based on the realities of today.
“Any price unilaterally determined and announced by the minister is in violation of the law,” he added.