FG slashes fuel price by 50 kobo, though it still sells for N140 in Anambra

The Federal Government on Tuesday officially released the revised pricing template for Premium Motor Spirit (Petrol) for the first quarter of 2016, indicating that fuel will now sell at N86.50 per litre at filling stations operated by major and independent marketers. This is a reduction of the pump price by 50 kobo from the current N87 per litre. The new price regime comes into effect from Friday, even though in Anambra state the prize is N140 and may be same or worst elsewhere.
However retail outlets owned by Nigerian National Petroleum Corporation (NNPC) will sell the product for N86 per litre. The new pricing which reflects the open market policy of the government means that the Muhammadu Buhari administration would no longer pay subsidy for the product.
The Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Farouk Ahmed, who briefed journalists in Abuja on the new policy, said the template will be reviewed at the end of March 2016.
Farouk explained that the major components of the pricing template affected by the review are traders’ margin which has been cancelled (it was N1.47/litre), Lightering Expenses N2/li¬tre (N4.07/litre), NPA N0.36/litre (0.77), Jetty Throughput Charge N0.40/litre (N0.80/litre), Stor¬age Charge N1.50/litre (N3/li¬tre), Retailers margin N5/litre (N4.60/litre), Transporter N3.05/litre (N2.99/litre), Dealers’ Mar¬gin N1.95/litre (N1.75/litre), and Bridging Fund N4/litre (N5.85/litre)
The revised template now has ex-depot price of N77 down from N77.66 per litre.
Ahmed declared that, “ac¬cordingly, the ex-depot price for PMS shall now be N77 per litre while the pump price shall be N86.50k per litre in line with the prevailing market trend. This new price regime is with effect from 1st January, 2016.
“All marketers are hereby ad¬vised to adhere strictly to the PPPRA approved ex-depot and pump prices, as the PPPRA, in conjunction with relevant gov-ernment agencies shall enforce compliance.
“However, for NNPC im¬port, because an element of the template which is the financing cost is not captured in the NNPC template, therefore NNPC import is slightly lower. The NNPC price will be N86 per litre, meaning that if you go to NNPC retail stations, you should buy at N86 per litre and then N86.50k in other sta¬tions,” he said.
Ahmed explained further that the whole idea of the review was to instill competition and stabili¬ty in the downstream petroleum sector.
According to him, another “important point is that this is not static as there will be a quar¬terly review of the price template. However, if there is a major shift, the minister may call for a review either upwards or downwards, depending on the market. But for now, at least for the first quar¬ter, this price remains for three months, from January to March.”
Ahmed disclosed that there is supposed to be a Pricing Adviso¬ry Committee made up of indus¬try technocrats which would meet regularly and advise the PPPRA on price movements.
He added: “But the PPPRA will still sit down and do its work, the committee will advise it on any drastic movement in price. The open market price is N86.29k, if you do the calcula¬tion, that means there is an ele¬ment of over recovery and what we will do now is that we will go back to the marketers and bill them for the recovery.
“With regards to NNPC, their arrival is N85.93k but they are selling at N86, so there will also be element of over-recovery, how¬ever, we are comfortable with the numbers.”
Ahmed said the review was done “in order to encourage in¬vestments in retail outlets; we slightly increased the provisions in the retailers, transporters, and dealers’ margin.
“In terms of distribution mar¬gin, we have also revised down the bridging fund and increased the retailers, dealers and trans¬porters’ margins.”
Meanwhile, the Nigeria La¬bour Congress (NLC) has asked its state councils and affiliate un¬ions to prepare for a showdown with the Federal Government over its ongoing move to remove fuel subsidy.
The NLC General Secretary, Dr. Peter Ozo-Eson, in a state¬ment on Tuesday, said that the organisation was determined to fight the subtle removal of the fuel subsidy by the government.
He said a meeting of the Na¬tional Executive Committee (NLC) of the congress would be convened in January. He was however silent on the specific date for the NEC meeting.