The Federal Government would on January 1 next year reduce the pump price of the Premium Motor Spirit (PMS) to N85 per litre.
The Minister of State for Petroleum, Dr. Emmanuel Ibe Kachikwu broke the news to journalists in the Port Hacourt Refinery Company (PHRC), where he spent Christmas inspecting the plant.
Asked when would the Federal Government release the new price template 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.”
According to him, the new price is below the current N87 per litre and 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 noted that following government’s analysis and research, it had been realized 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 subsidize 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 subsidize.
“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, which is deteriorating by the day with lower prices of crude.”
He submitted that from the application market realities for the pricing modulation, government had discovered 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 remained N87 at the moment.
Kachikwu said: “But in applying that where we landed, when we did the analysis for the very first time, it 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.
According to him, the private contractors had 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 was now beginning to have a clue on how to tackle pipeline insecurity, adding that it was 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 were 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 was required in the factory.
He said that the refinery was now aging and that as a result, one fault comes up after the other even after repair, but assured that it would stop when government repairs the plant holistically early next year.
According to him, about 5.5million litres of PMS is expected daily 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 20million 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 2.3million. Let’s start from there. I will like to see them getting closer to 80 or 90. By the time they do that, we will be getting 11 to 12million litres out of this place.”