The Nigerian National Petroleum Corporation believes there will be no fresh subsidy in the 2016 budget.
At a media interaction in Abuja, the Group General Manager, Corporate Planning, Mr Bello Rabiu, explained that a new framework was being worked on for the management of subsidy on petrol. Mr Rabiu said that the new template would leave the price of petrol at a capped price of 97 Naira.
He, however, insisted that the 2016 budget would only capture arrears of subsidy payments. Rabiu said, “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 ground now in the sector. On Thursday, the Minister of State for Petroleum, Dr Ibe Kachikwu, told reporters that contrary to speculations, the government was not interested in the removal of subsidy on petroleum products, but that a price modulation that would reduce its involvement in pricing starting 2016 would be introduced.
The Minister of State for Petroleum, Dr Ibe Kachikwu, briefed reporters on the government’s position on Thursday.
Dr Kachikwu said a periodical review of the Petroleum Pricing Template and a flexible management of the pricing system would be considered. He said the review would allow marketers to trade freely and reflect prevailing international price of crude. According to him, the review will be the key focus in the first quarter of the coming year.
At the moment, the nation is facing fuel scarcity and untold hardship with queues seen at different service stations across the oil-rich nation, Nigeria.
Mr Rabiu finally stated that the government had the target of reducing the amount charged for logistics and distribution margin on every litre of premium motor spirit (PMS) consumed in Nigeria. The GGM was affirmative that the adjusted template would surely have a considerable reduction in the pump price of petrol when it is completed before the end of the first quarter of next year, stressing that when this is achieved, there would be no need for subsidy as the import price of PMS would have reduced considerably. 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.”
Source: ©theBRAND Radio