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Why fuel price won’t increase for now -Kachikwu

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The fear of a possible rise in the current price of premium motor spirit (PMS), also known as Petrol, is becoming more obvious as the price of crude oil in the International market has witnessed some increase since the beginning of 2017.

Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, noted on Saturday that the high cost of importing the commodity had discouraged independent oil marketers from importing fuel in the past two months, thereby leaving the responsibilities of bringing the petroleum products to the Nigeria National Petroleum Corporation (NNPC).

Kachikwu confirmed that the price of PMS, is rising above the current pump price, but that there might not be an upward price review because NNPC, is currently absorbing the differences in the prices.

Kachikwu hinged the hope of retaining the current price of PMS on the anticipation that the Central Bank of Nigeria(CBN) would provide his ministry with subsidised foreign exchange for importation of the products.

However, he stated that efforts were being made for the Federal Government on how to continue to absorb the price diferential of more than 35 per cent increase, from the price template used in fixing the current price of N145 per litter.

Read also: 2017 BUDGET : Senate, House disagree on early passage

The Minister said, even though there might be a review of the cost of importing petrol, with the aim of removing several multi-layered charges and costs that might affect the pump price, government would do all things possible to retain the price of the product at filling stations.

But he did not address the yet to be resolved allegation by independent marketers, in November 2016, that the NNPC was usurping their quotas in fuel importation.

Most of the companies threatened to stop importation if the Federal Government failed to wade into the issue.

He said, “When we did all the pricing for crude, it was between $25 to $30 per barrel; today, it is in excess of $54, which is fantastic because it means that our revenue stream is improving.

“But, it is a twin window, whenever the price of crude goes up, obviously the price of refined petrol goes up and we begin to have systemic challenge in terms of the pricing on the local base.

“So that gap has begun to return and today what you find is that the NNPC continues to import massively on behalf of the Federal Government.

“It has gone back to about 90-95 per cent for the whole country and therefore its books are absorbing some of the cost implications of this.

“One of the ways government is doing this is that we are looking at our existing template position, and what we are doing with that is first addressing some of the soft ends of things that affect pricing,” he stated.

According to the minister, “there is adequate quantity of petrol in the country to prevent reverting to fuel scarcity in the country. There isn’t fuel scarcity, because we are not short of products, but the downstream and midstream sectors continue to remain challenged.

“We had issues of pricing efficiency and governance, for at that time the prices we were selling at were so ridiculously below what the sustainable prices are.

“And you find a situation where basically marketers disappeared from the industry. So, we had massive shortages, queues and everything seems to be breaking down. We’ve since come out from that.

“We have moved from a fully subsidy based sect to a partially liberalised sector. I say partially because we haven’t quite achieved the template to have a fully liberalised sector.

What this has done for us is that it had reduced consumption from 50 million litres to 37 million litres a day.”

The Minister also disclosed that in the long run, the NNPC would have to reduce its presence in the country’s petroleum downstream sector because of the cost on its books, adding that the NNPC would have to begin to operate as a profit venture outfit.

 

 

 

 

 

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