‘FG won’t review pump price until...’
THERE are strong indications that the pump price of Premium Motor
Spirit (PMS), otherwise called petrol, may not be reviewed downward
until crude price at the international market falls below $50 a barrel.
Investigations by the Nigerian Tribune revealed that reduction in pump price of petrol may not be possible in near future, due to the fact that the downstream sub-sector was not deregulated.
Crude oil price fell below $60 per barrel, closing at $57.92 per barrel on Tuesday, according to calculations of Organisation of Petroleum Exporting Countries (OPEC) which Nigeria is a member.
An industry source, who pleaded anonymity, told the Nigerian Tribune on Tuesday that the Federal Government might not reduce pump price of petrol until it falls below $50 per barrel.
According to him, “the government may not reduce pump price of petrol, despite fall in crude price, because the sector is not deregulated.
“Other countries that adjusted pump prices of petrol have deregulated the sector. If Nigeria has deregulated the sector, which the government attempted to do in January 2012, the price will definitely fluctuates as crude price fluctuates at the international market.”
Furthermore, he argued that “the government was responsible for subsidising the pump price when the crude oil was high. High crude price meant higher pump price, but the government was subsidising it from excess revenue it was realising from crude oil proceeds.
“Now that the crude price has dropped significantly, firstly, revenue has dropped too for the government. You must also note that the government is paying subsidy, which has reduced significantly compared to what it was paying while the crude price was higher.
“Until the government improves domestic refining capacity and deregulate the sector, the consumers will continue to pay the cost of importation of refined petroleum products.”
However, Nigerian Tribune can authoritatively report that the pump price of petrol will soon drop below N97 per litre if crude price drops further below $50 per barrel.
According to the website of Petroleum Products Pricing Regulatory Agency (PPPRA), monitored by the Nigerian Tribune, it was discovered that subsidy payment had reduced from N4.79 per litre as of Friday to N3.66 per litre as of Tuesday.
Landing cost of petrol currently stands at N98.15 per litre, while Expected Open Market price is N100.66 per litre. Ex-depot price remains N81.51 per litre, but the recommended retail price stands at N97 per litre.
On the effect of devaluation of the naira on pump price of petrol, the Head, Investment and Research, AfriInvest Ltd, Mr Ayodeji Ebo, told the Nigerian Tribune on Tuesday that devaluation of the naira would affect the pump price by about eight per cent.
Investigations by the Nigerian Tribune revealed that reduction in pump price of petrol may not be possible in near future, due to the fact that the downstream sub-sector was not deregulated.
Crude oil price fell below $60 per barrel, closing at $57.92 per barrel on Tuesday, according to calculations of Organisation of Petroleum Exporting Countries (OPEC) which Nigeria is a member.
An industry source, who pleaded anonymity, told the Nigerian Tribune on Tuesday that the Federal Government might not reduce pump price of petrol until it falls below $50 per barrel.
According to him, “the government may not reduce pump price of petrol, despite fall in crude price, because the sector is not deregulated.
“Other countries that adjusted pump prices of petrol have deregulated the sector. If Nigeria has deregulated the sector, which the government attempted to do in January 2012, the price will definitely fluctuates as crude price fluctuates at the international market.”
Furthermore, he argued that “the government was responsible for subsidising the pump price when the crude oil was high. High crude price meant higher pump price, but the government was subsidising it from excess revenue it was realising from crude oil proceeds.
“Now that the crude price has dropped significantly, firstly, revenue has dropped too for the government. You must also note that the government is paying subsidy, which has reduced significantly compared to what it was paying while the crude price was higher.
“Until the government improves domestic refining capacity and deregulate the sector, the consumers will continue to pay the cost of importation of refined petroleum products.”
However, Nigerian Tribune can authoritatively report that the pump price of petrol will soon drop below N97 per litre if crude price drops further below $50 per barrel.
According to the website of Petroleum Products Pricing Regulatory Agency (PPPRA), monitored by the Nigerian Tribune, it was discovered that subsidy payment had reduced from N4.79 per litre as of Friday to N3.66 per litre as of Tuesday.
Landing cost of petrol currently stands at N98.15 per litre, while Expected Open Market price is N100.66 per litre. Ex-depot price remains N81.51 per litre, but the recommended retail price stands at N97 per litre.
On the effect of devaluation of the naira on pump price of petrol, the Head, Investment and Research, AfriInvest Ltd, Mr Ayodeji Ebo, told the Nigerian Tribune on Tuesday that devaluation of the naira would affect the pump price by about eight per cent.
Report from Tribune
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