FG scraps fuel subsidy, reduces petrol to N85 per litre from Jan. 1

The Federal Government has announced the
scrapping of oil subsidy and a reduction of the
pump price of the Premium Motor Spirit (PMS)
to N85 per litre from January 1, 2016.



Minister of State for Petroleum, Dr. Emmanuel
Ibe Kachikwu, broke the news to journalists in
the Port Harcourt Refinery Company (PHRC),
where he spent Christmas inspecting the plant.
Asked when would the Federal Government
release the new price temperate of the
Petroleum Product Pricing Regulation Agency
(PPPRA), he said that he approved the new price
for the agency on Thursday.
Pressed to reveal when the new price will
become effective, Kachikwu, who is also the
Group Managing Director of the Nigerian
National Petroleum Corporation (NNPC), said:
“Like I said, we have done a modulation
calculation and it is showing us below N87. I
imagine that if PPPRA publishes it today, it will
become effective immediately. But the 1st of
January that is when we are looking at.”
He noted that the new price is below the
current N87 per litre, saying that it would now
convince Nigerians that the pricing modulation
that the Federal Government promised to
embark on a few days ago was not a trick.
He further noted that following government’s
analysis and research, it has been realised that
the country can fluctuate the fuel market in
accordance with the crude oil market
fundamentals.
Justifying government’s reasons for scrapping
the Petroleum Support Fund otherwise known
as oil subsidy, Kachikwu explained that
government can no longer afford to subsidise
the product following the fraud that has
attended its operation.
He added that it has become clear that
government earnings are dipping on daily basis.
His words: “It is out I signed off on it yesterday
(Thursday). I imagined that in the next couple
of days the marketers would get advice on that.
The nice thing about the PPPRA, where I signed
up on it yesterday is that the price will be far
below N87.
“So for the first time people will understand
that the pricing modulation I was talking about
is not a gimmick. It is for real. We have gone to
find out how we will be able fluctuate this
market to reflect what the reality of crude
market is. The objective is that one, we cannot
afford to continue to subsidise.
“We can’t even understand where those
subsidies were going to. There is a lot of fraud
elements in it so we need to cut that of.
“The second is the earning capacity of the
Federal Government is deteriorating by the day
with lower prices of crude and come out more.”
The minister submitted that from the application
market realities for the pricing modulation,
government has discoverd that petrol would sell
for either N85 or N86 per litre.
The minister recalled that it was from this
axiom that President Muhammadu Buhari
announced that the price of petrol remains N87
at the moment.
Kachikwu said: “But in applying that where we
landed when we did the analysis for the very
first time was about N85 or N86 so it is below
N87.
“And maybe the first price that will come will
reflect it. That was why Mr. President said that
prices will be N87 for now. And that is what we
have in mind.”
On the security of the pipelines, he said that
government had tried stopping the menace with
military intervention to no avail before it
engaged some private contractors who had
worked with the majors for the crude pipeline
management.
According to him, the private contractors have
taken over Atlas Cove, Mosimi and they would
be extending the surveillance to Ilorin between
yesterday and today.
They will also look at the Port Harcourt and Aba
axis, he stressed.
The minister said that government is now
beginning to have a clue of how to tackle
pipeline insecurity, adding that it is far more
expensive to convey petroleum and products
through pipelines than trucking them by road.
He said from the briefing he got from the
inspection of the refineries, they are close to re-
opening.
“In the next one week, we are ready to see
products out of here,” he disclosed.
Kachikwu said that a lot of the rehabilitation of
the refinery was being done with intensive
manual labour of the staff since paucity of fund
affected the holistic change that is required in
the factory.
He said that the refinery is now aging so one
fault comes up after the other even after repair
but that would stop when government repairs
the plant holistically early next year.
According to him, about 5.5 million litres daily
of PMS is expected from the refinery in the next
few days. Other products to come from the
plants, said Kachikwu “are AGO, Kero and
others. Where we love to be is to have half of
the consumption of this country at the refineries
at the minimum, which is about 20 million
litres. But where we are with the sleepless night
I have had in the last few weeks any molecule is
significant.
“Kaduna will still be doing 2.3 million. Let’s
start from there. And that is doing 60 per cent
performance. This is still an assumption. I will
like to see them getting closer to 80 or 90. By the
time they do that we will be getting 11
to 12 million litres out of this place.”

Source:  News Scroll.