While we bask in euphoria at the substantial compliance by fuel marketers in most parts of the country with the directive to dispense Premium Motor Spirit (PMS) at N87 per litre, more joyous news have been released as the Petroleum Products Pricing Regulatory Agency (PPPRA) recently revealed that the persistent drop in global oil prices would see the pump price of fuel in Nigeria plummet simultaneously.
This latest revelation by the PPPRA has left many wondering whether to pray for better fortunes for the international crude oil market as this will mean increased revenue generated for the nation or to pray the oil market crumbles further so we could enjoy the luxury of reduced fuel pump price.
It was in December 2015 that PPPRA stated that the pricing template for petroleum products would be reviewed occasionally to reflect fluctuations in the price of crude oil in the international market.
As of February 16, the price of crude oil (Bonny Light) stood at $32.32 per barrel, while the official naira exchange rate was N197 against the dollar, according to the Central Bank of Nigeria.
While handing over to the most senior officer of the PPPRA, Mr. Moses Mbaba last week, Ahmed noted that as of February 3, 2016 about one month after the review of the pricing template of petrol, the country had saved N2.6bn as over-recovery on the product.
He explained that the value was low because some of the over-recoveries were still arriving and he revealed that the decision on the review of the pump price of petrol, would be taken next month by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, after due consultation with stakeholders, and based on the price of crude oil in the international market.
When asked if the price could be reduced in the future considering the fall in crude oil prices, Ahmed said, “Yes, but wait till March and you will see. Because the minister will be fair in the decision he will take, and because he will take the decision pragmatically.”
The former PPPRA boss added that due to the current state of over-recovery, the PPPRA was recovering some money from the Nigerian National Petroleum Corporation and oil marketers. He also noted that as of February 16, 2016, the country recorded over-recovery of N13.81 per litre of petrol, stating that this meant that the landing cost of PMS was lower than the selling price by N13.81.
“There has been an account launched at the CBN and being managed by the Accountant-General of the Federation where the over-recovery funds are deposited. So, there is no question of where the money goes to. As of February 3, 2016, the estimate in that account, because we are verifying based on what was imported, is just a small amount of about N2.6bn. But this is just the beginning, because some of them were just arriving in December; that is why the subsidy over-recovery is low.”
Since the process of the review of the pricing template would likely commence by March 15, 2016, we just have to wait patiently to see how the crude oil markets thrives until that time. However, the committee to undertake the review would consist of all the stakeholders in the petroleum industry, including major and independent oil marketers as well as depot owners.