Despite the recent reduction in the pump price of petrol from N97 to N87 per litre, the Federal Government has said it will still pay subsidy on the product for the next 40 days.
The government explained that fuel consumed in Nigeria was “heavily subsidised” before the global crunch in crude oil prices, adding that it would take some time before subsidy on the product would stop.
The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, while explaining why the pump price of fuel in Nigeria did not reduce as soon as global crude oil prices plummeted, said Nigeria was importing against the global import prices for crude.
She spoke during a Raypower radio programme monitored by our correspondent in Abuja.
Speaking also on the price of diesel, the minister said the product’s price was been decided by market forces as diesel was not regulated by the Federal Government.
“Bear in mind that we will still be covering subsidy cost for at least 40 days for those marketers who had already brought in stock, there should be no issue with distributing the product at the lower price,” the minister said.
The PUNCH reported on Thursday that despite the recent reduction in the pump price of petrol, the government claimed it still pays N2.84 as subsidy on every litre of the product consumed.
Also, the Petroleum Product Pricing Regulatory Agency, in a statement on Friday, insisted that with the current pump price of N87/litre, the government was still subsidising the pump price of petrol in favour of consumers.
The PPPRA Executive Secretary, Mr. Farouk Ahmed, said the price of crude oil dropped to a point where the open market price of petrol also fell to a level where the government considered it appropriate to relieve some of the burden imposed on Nigerians by the knock-on effect of the dwindling price of crude oil on the economy.
He said the price of crude oil averaged $62 in December, 2014 and dropped to an average of $50 per barrel for the first half of January, 2015.
According to Ahmed, it is after a consistent monitoring of the trend that the government was able to confirm its ability to reduce the pump price of gasoline, commensurate with the amount announced.
He explained that even at the lowest crude oil price of $47.23 recorded on January 16, 2015, the open market price of petrol was about the same as the erstwhile price of N97/litre.
“What this means is that at the new price of N87 per litre, government is still subsidising the pump price of petrol,” Ahmed was quoted in the statement.
On why the price of diesel did not respond to the global crash in crude oil prices considering the fact that the product was not subsidised, Alison-Madueke said diesel was not controlled by the government.
She said, “Therefore you will find that diesel’s response is directly related to the market indices of supply and demand in a free market. It relates directly to whatever cost it is being procured abroad, that is the global prices. So we have no business with that.”
On kerosene and why it was difficult to get the product at the subsidised rate of N50/litre, she said the transportation cost to remote areas coupled with the greed of some marketers were the major reasons why kerosene price was high in many locations.
Alison-Madueke said, “There are unscrupulous marketers everywhere who just put more on top of their products than the actual transportation cost. We have come down hard on them so many times and have sealed some of them. But as you do one, another one comes behind and that is why I appeal to marketers because it is greed and avaricious behaviour that causes this.”
Meanwhile, the government officially commenced its Kero-Correct Scheme on Friday in Abuja. The scheme, according to the Group Managing Director, Nigerian National Petroleum Corporation, Dr. Joseph Dawha, would ensure the sale of kerosene at the regulated price of N50/litre in filling stations across the country.