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Fuel Subsidy

PPPRA hides open market price of petrol since crude oil crossed $66

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Contrary to its hitherto momentary publication of open market price of petrol data, the Petroleum Products Pricing Regulatory Agency (PPPRA) seems to have started hiding the statistics since when it posted it last on its website on March 20, 2018, when the international benchmark price for oil (Brent) was around $66 per barrel.
Analysts say the suspension of the publication means a lot in terms of transparency and accountability and that the Federal Government had been under intense pressure to hike fuel price since 2017 when crude oil price rose to $64, but was limited by criticisms that will flow from Nigerians ahead of the just concluded election.
Giving some rare insights on a national TV talk programme earlier this week, the Minister of State for Petroleum Resources, Dr Ibe Kachikwu, said the landing cost of Premium Motor Spirit (PMS), is N35 higher than the pump price of N145 per litre, an indication that the federal government is currently hemorrhaging on subsidy payment at a time it is struggling to implement midway into 2018 budget.
However, he was quick to add at the programme that “any attempt to remove the subsidy must be very well-managed,” landing cost of petrol keeps jumping with rising crude oil prices.
Explaining more on managing and working towards removing subsidy, Dr Kachukwu recalled that in 2016, the government wrote to the Nigeria Labour Congress and all the trade unions, adding that meetings were held with the security apparatus.
According to him, “Even when there was a consensus on how we were going to do it, we still had an issue at the very tail end of the moment; NUPENG and PENGASSAN supported but, of course, the other members of the trade unions pulled out.
“Eventually, thankfully, Nigerians saw through what we were trying to do and let it happen. And thank God that happened at the time because when you look at the gap today, the landing cost is about N180 per litre and sale price is N145. Imagine if it (pump price) was N90-something; we will literally be a bankrupt country.”
He further observed that “The point I am making is that anything you are going to do on subsidy requires a very efficient management of information – getting everybody who are stakeholders to tie into it.
“Should we deal with the removal of subsidy? I was gung-ho when I assumed this position that there was no way I was going to tolerate a subsidy regime at the time in 2015 of about N1.2tn-N1.3tn. There was just no way; we didn’t have the capacity to continue to pay.”
“So, I convinced the President that this needed to happen; thankfully, he listened, he agreed and we did. Now, we then had over-recovery period for quite a while and then we went into this upswing in prices that has now taken us again into under-recovery,” the minister noted.
However, whereas government and NNPC have continued to play down the challenge of subsidy and availability of petrol nationwide, there are strong indications that scarcity is still holding sway across the country.

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