Latest findings from the Nigerian National Petroleum Corporation (NNPC) indicates that the pump price of petrol may sell for less than N87 per litre by the first quarter of 2016.
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 (PPPRA) contains significant discrepancies that needs to be reviewed and adjusted.
The corporation’s Group General Manager, Corporate Planning and Strategy, Mr. Bello Rabiu, told newsmen 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 which will be announced soon.
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.
He also stated that the adjusted template would be used subsequently to modulate prices 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.
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 also assured Nigerians that the NNPC had enough petrol in its supply to sustain the country for at least 12 days, and urged motorists and petrol seekers to avoid panic buying.