‘Petrol Price Reduction Not Adequate’


THE question on the lips of most Nigerians since the pump price of petrol was moved downward by N10, is why N10?

  It is reasoned that if crude oil price has fallen by more than 50 per cent at the international market, Nigerians should not buy petrol at more than N50 per litre.

  But the Executive Secretary of Petroleum Products Pricing Regulatory Agency (PPPRA), Farouk Ahmed, argued that the petroleum pricing is more than addition and subtraction of figures.  

  He explained in Abuja that the landing cost of N74.35 per litre of PMS as at the close of business last Friday, the addition of distribution margin of N15.49 per litre would translate to an open market price, or pump price of N89.84 per litre. With this figure, it shows that the Federal Government will still be subsidising fuel consumption to the tune of N2.84 per litre.

  Additionally, in exercising its mandate of determining the pricing policy and setting benchmark prices of petroleum products, the PPPRA thereby announced a new ex-depot price of PMS as N77.66 per litre.

  The PPPRA boss explained: “In view of the foregoing, oil marketers are hereby advised to adhere strictly to this new price regime, as the PPPRA, in conjunction with the Department of Petroleum Resources (DPR), shall enforce compliance in order to ensure that consumers benefit fully from this new review. In other words, any violation of the prevailing price regime shall attract appropriate sanctions.”

  The agency, therefore, urged Nigerians against any form of panic buying, saying there are enough products in all depots across the country.

  A further breakdown shows that landing cost per litre includes cost and freight, which stands at N72.40; N1.28 as marketers margin; N3.91 as lightering expenses. While port charges stands at 67 kobo, the cost of financing is 35 kobo. Jetty or depot charge stands at 80 kobo while storage charge is N3.

  The distribution chain margins include retailers getting N4.60, N2.99 goes to transporters, dealers get N1.75, N5.85 for bridging fund, marine transport average is 15 kobo while 50 kobo goes into administrative charge.

  To the Trade Union Congress (TUC), the N10 is obviously not enough, and there is no reason Nigerians should not have more reduction.

  It, however, commended the Federal Government’s downward review of the price of fuel from N97 to N87 per litre.

 The movement noted that the move unreservedly shows the government’s sensitivity to the plight of millions of impecunious Nigerians.

  TUC, however, noted that in as much as it commends the downward review, it noted that the decrease is not commensurate with the fall in the price of oil in the international market.

  It said: “The N10 reduction certainly has less than significant effect on costs of transportation, goods and services. The new N87 per litre price is sure to still ‘destabilise’ and bore holes in the ever-shrinking pockets of the Nigerian masses. Nigerians deserve an even greater slash in the price of fuel. All appropriate measures must be taken to strengthen the purchasing power of the common man.”

  For the umpteenth time, the trade centre called for the diversification of the Nigerian economy and the revival of domestic refining capacity of local refineries. 

  “This brings us to the question of the nation’s reliance on a mono-economy. Surely, the time to effectively diversify our economy is now. As an organisation abreast with the numerous resources nature has bequeathed our nation, we are pained and distraught over the myriad of avoidable challenges facing the nation. It is especially bewildering that Nigeria, Africa’s top oil producer, relies on importation for most of its fuel needs because the country’s refineries are in poor state, whereas the reverse is the case in other oil producing countries. 

  “Our present plight could have been avoided or substantially ameliorated if the three new refineries that the government has since proposed to build to complement the epileptic capacity of the existing ones had been completed before now. Worse still, the Petroleum Industry Bill which could have assisted in stabilising and invigorating the sector has remained on the dusty shelves of the national legislature for four long years due to stiff opposition founded on personal interest. Surely, the executive and legislative arms of government know better than to let this unwholesome situation continue,” it stated.

  The reduction is purely a matter of pure economics and management of the national economy, the Senior Special Adviser to the President on Media and Publicity, Dr Reuben Abati told The Guardian. He dismissed political consideration for the decision.

  He argued that there is a government in place that is elected to protect the Nigerian populace as well as ensuring their welfare at all times. Abati posited that the reduction in the pump price is an economic reality that is playing out in the global arena that has nothing to do with the political development of Nigeria.

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