Following months of uncertainty in which
Nigerians endured debilitating shortage of petrol, the Federal
Government on Wednesday finally ended the subsidy regime on the product
and approved an increase in the pump price.
The Minister of State for Petroleum
Resources, Dr. Ibe Kachikwu, disclosed this to State House
correspondents at the Presidential Villa, Abuja.
Kachikwu said the decision was reached
at a stakeholders’ meeting presided over by Vice-President Yemi Osinbajo
and attended by the leadership of the Senate, House of Representatives,
the Nigeria Governors’ Forum and labour unions, including the Nigeria
Labour Congress, Trade Union Congress, Nigeria Union of Petroleum and
Natural Gas Workers, and Petroleum and Natural Gas Senior Staff
Association of Nigeria.
The meeting was held inside the vice president’s official residence, the Aguda House.
Kachikwu said while the Petroleum
Products Pricing Regulatory Agency would be announcing the new price, he
added that it would not be more than N145 per litre.
He said, “Following a detailed
presentation by the Minister of State for Petroleum Resources to the
meeting, it has now become obvious that the only option and course of
action now open to the government is to take the following decisions:
“In order to increase and stabilise the
supply of the product, any Nigerian entity is now free to import the
product, subject to existing quality specifications and other guidelines
issued by regulatory agencies.
“All oil marketers will be allowed to
import the PMS on the basis of forex procured from secondary sources and
accordingly, the PPPRA template will reflect this in the pricing of the
product.
“Pursuant to this, the PPPRA has
informed me that it will be announcing a new price band effective today,
May 11, 2016, and that the new price for PMS will not be above N145 per
litre. We expect that this new policy will lead to improved supply and
competition, and eventually drive down pump prices as we have
experienced with diesel.”
The minister added, “In addition, this
will also lead to increased product availability and encourage
investments in refineries and other parts of the downstream sector. It
will also prevent the diversion of petroleum products and set a stable
environment for the downstream sector in Nigeria.
“We share the pains of Nigerians but, as
we have constantly said, the inherited difficulties of the past and the
challenges of the current time imply that we must take difficult
decisions on these sorts of critical national issues. Along with this
decision, the Federal Government has in the 2016 budget made an
unprecedented social protection provision to cushion the current
challenges.
“We believe in the long term that improved supply and competition will drive down prices.
“The DPR and PPPRA have been mandated to
ensure strict regulatory compliance, including dealing decisively with
anyone involved in hoarding of petroleum products.”
Kachikwu explained that the meeting
where the decision was reached reviewed the current fuel scarcity and
supply difficulties in the country as well as the exorbitant prices
being paid by Nigerians for the product, which range on the average from
N150 to N250 per litre.
The minister said the meeting also noted
that the main reason for the current problem was the inability of
importers of petroleum products to source foreign exchange at the
official rate due to the massive decline of foreign exchange earnings by
the government.
The PPPRA, the government agency
responsible for fixing petroleum product prices, confirmed that the
price of PMS had risen from N86.5 to N145 per litre.
In a statement signed by its Acting
Executive Secretary, Mrs. Sotonye Iyoyo, the agency said, “In
furtherance of its mandate to ensure the efficient supply and
distribution of petroleum products, the PPPRA, hereby announces,
effective immediately, that the new price band for the PMS shall be at a
maximum of N145/litre. However, the NNPC retail stations on the
outskirts of major cities are advised to sell at prices lower than
N145/litre.
“This review became imperative in the
face of extreme difficulties faced by petroleum product importers in
sourcing foreign exchange. To meet the consumption demand of the nation,
importers will henceforth be permitted to source for their foreign
exchange requirements from secondary sources.”
Oil marketers who spoke with our
correspondents on the development stated that the increase in petrol
price would not immediately clear the queues at filling stations.
They noted that the government’s resolve
to allow marketers source for forex from unofficial sources meant that
some dealers might spend as much as N300 per dollar.
While reacting to the announcement, the NLC vowed to resist the increase in the pump price of petrol.
The NLC also put its councils and affiliate unions on notice for immediate mobilisation to resist the increase.
The General Secretary, NLC, Dr. Peter
Ozo-Eson, said in a statement that the increase was unilaterally done
and only showed the level of insensitivity and impunity of the
government.
He said that the Congress had scheduled an emergency meeting of its National Executive Committee for Friday.
The NLC called on the Federal Government
to revert the price to N86 and N86.50 or face the ire of the labour
movement and its civil society allies.
The NLC said in the statement, “The
unilateral increase in the price of petrol by the government represents
the height of insensitivity and impunity, and shall be resisted by the
Nigeria Labour Congress and its civil society allies.
“With the imposition on the citizenry of
the criminal and unjustifiable electricity tariff, and resultant
darkness and other economic challenges brought on by the devaluation of
the naira and spiralling inflation, the least one had expected at this
point in time was another policy measure that would further make life
more miserable for the ordinary Nigerian.
“The latest increase is the most
audacious and cruel in the history of petroleum product price increase
as it represents not only about 80 per cent increase, but is tied to the
black market exchange rate.”
However, the President of the TUC, Mr.
Bala Kaigama, said that the congress could only speak on the increase
after a meeting of its organs.
Both NUPENG and PENGASSAN said they would on Thursday (today) and Friday deliberate on the new pump price.
The South-West Chairman of NUPENG,
Alhaji Tokunbo Korodo, disclosed this in an interview with the News
Agency of Nigeria in Lagos on Wednesday.
According to him, it is too early to make any official statement until the two bodies meet to deliberate on the matter.
He said that the meeting would discuss the new development and come up with a stand on the matter.
However, the Director-General, Lagos
Chamber of Commerce and Industry, Mr. Muda Yusuf, commended the decision
of the government to liberalise the petroleum downstream sector given
the acute resource constraint that the country currently.
“The overregulation of the sector and
the subsidy regime had put enormous pressure on government finances and
on our foreign reserves. It was evident that the policy choice was not
sustainable. The review is in the long term interest of the economy and
the people,” he said.
The Managing Director and Chief
Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck
Rewane, said, “It (fuel subsidy removal) is an excellent economic policy
move and you will see the effects very soon, because the current system
is not working. It costs as much to administer as it costs to buy the
fuel. So, if you now take away the cost of administration, then
effectively the price of fuel will come down.
“That is the first big step in the
direction of a deregulated and perfect market. Whatever the price is, if
it is determined by the market, it will come down. Markets are by
nature efficient. After this move, the next thing that will happen is
that we will have fuel everywhere in the country. And it will increase
productivity and bring down inflation.”
The Head of Energy Research, Ecobank
Capital, Mr. Dolapo Oni, said the government had taken a good step
forward with the decision.
The Executive Secretary, Major Oil
Marketers Association of Nigeria, Mr. Obafemi Olawore, said, “We are
looking for deregulation. If that is deregulation, we believe it is a
step in the right direction. But we have not been officially
communicated,” he said.
The National Operations Controller,
Independent Petroleum Marketers Association of Nigeria, Mr. Mike
Osatuyi, said, “The move is fantastic. That is what we have been
clamouring for and we are going to have peace in the country. There is
going to be price differential and competition in the market.”
Similarly, the President, Manufacturers
Association of Nigeria, Dr. Frank Jacobs said the removal of the fuel
subsidy was a step in the right direction.
source: punchng
source: punchng
