The pump price of petrol may sell for less than the current official price of N87 per litre before the end of the first quarter of 2016, the Nigerian National Petroleum Corporation, NNPC, has revealed.
The announcement is coming on the heels of the Kaduna Refining and Petrochemical Company, KRPC, resuming production of petroleum products beginning from today (Saturday).
According to the NNPC, the current pricing template for petrol, which was prepared by the Petroleum Products Pricing Regulatory Agency, contains glaring inefficiencies that deserve to be looked into.
The Group General Manager, Corporate Planning and Strategy of the NNPC, Mr. Bello Rabiu, who made this known at a press briefing in Abuja on Friday, argued that going by the fall in the price of crude oil, it was important to consult relevant stakeholders in order to produce an adjusted template.
This consultation with stakeholders, he explained, was necessary to negotiate and reduce some of the costs associated with the importation of petroleum products.
Mr. Rabiu added that government had the target of reducing the amount charged for logistics and distribution margin on every litre of premium motor spirit consumed in Nigeria.
He was optimistic that the adjusted template would surely have a considerable reduction in the pump price of petrol when it is completed before the end of the first quarter of next year.
Rabiu said, “We are engaging industry stakeholders to review the PPPRA template that actually drives the cost of importation. This is because the actual cost of PMS minus the retail price of the product is subsidy. So if the cost falls to N80 per litre today, then where will the need be for subsidy? If the cost is less than the current retail price of N87 then it means there is no subsidy.
“So we are looking at the template to have it reviewed considering the realities on the ground now in the sector. What if after the review we are able to take away about N10 from this current template, which today puts the cost of petrol at N91.52 litre, then it means the cost may come down to around N82 per litre.
“That is why we said there is no need for subsidy in the 2016 budget. We say this because we know that the price of crude oil will not go so high in the next 12 months because of the high level of saturation in the market. So as soon as it is appropriate, we will announce a new price for PMS”.
The GGM stressed that the adjusted template would be used subsequently to modulate prices down or up on a periodic basis if required, adding that if oil prices continue to fall and inefficiencies are eliminated within the template, there will surely be negative subsidy.
The negative subsidy, he said, shall be remitted to the Petroleum Support Fund in line with the current PPPRA guidelines.
“The savings under such a regime could be domiciled in the PSF as a buffer for future subsidy (if any) that may arise during high oil price regime or invested by the industry in supply and distribution efficiency improvement projects such as decongestion of Apapa area, Single Point Monitoring in Port Harcourt and Warri, complimentary rail services, inland waterways, etc”, Bello said.
On the commencement of production at the KRPC, the Managing Director, Pipelines Product Marketing Company, PPMC, Mrs. Esther Nnamdi-Ogbue, said crude oil had been pumped to the facility from Warri.
Mrs. Nnamdi-Ogbue further stated that some pipelines had started pumping crude oil and refined products, adding that petrol had been pumped from Atlas Cove to Mosimi depot using the pipelines connecting both facilities pipelines.
The PPMC boss also said that between now and the end of the month, there are 12 vessels of products coming in with at least 30,000 metric tonnes each, stressing that there will be a ‘queueless’ Yuletide, and urged motorists and petrol seekers to avoid panic buying.