Fuel will be sold below N87/litre next year –NNPC

Firstclass newsline gathered that the pump price of petrol may sell
for less than N87 per litre before the end of the first quarter of
2016, latest findings from the Nigerian National Petroleum
Corporation have revealed.
This is coming as the corporation also announced that the Kaduna
Refining and Petrochemical Company would start producing 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 significant inefficiencies that should be reviewed.
The corporation's Group General Manager, Corporate Planning and
Strategy, Mr. Bello Rabiu, told journalists in Abuja on Friday 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.
Rabiu said consultation with stakeholders was to negotiate and
reduce some of the costs associated with the importation of petrol,
adding that the government had the target of reducing the amount
charged for logistics and distribution margin on every litre of
premium motor spirit consumed in Nigeria.
The GGM was affirmative 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,
stressing that when this is achieved, there would be no need for
subsidy as the import price of PMS would have reduced considerably.
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."
Bello stated 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.
He said, "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."
On the commencement of production at the Kaduna refinery, the
Managing Director, Pipelines Product Marketing Company, Mrs. Esther
Nnamdi-Ogbue, said crude oil had been pumped to the facility from
Warri.
She 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.
Nnamdi-Ogbue also assured Nigerians that the NNPC had enough petrol
to keep the country wet for at least 12 days, and urged motorists and
petrol seekers to avoid panic buying.