The Federal Government has said it would pay subsidy on Premium Motor Spirit, otherwise known as petrol, from the recoveries made in the first quarter of 2016.
This is coming from the latest Petroleum Product Pricing Regulatory Agency, PPPRA, template released in Abuja, yesterday.
The PPPRA said between January and March, the Federal Government was able to save about N10 billion as a result of selling the product above the expected open market price.
According to the new template, the expected open market price of petrol has risen to N99.38 per litre for independent and major oil marketers and N98.62 per litre for NNPC retail outlets.
It added that the expected open market price was the actual price of the product without subsidy and was based on the current exchange rate of N197 to a dollar.
It said at the current price of N86 per litre at NNPC retail outlets, the Federal Government was paying N12.62 per litre as subsidy on the product and N12.88 per litre as subsidy for other oil marketers’ price of N86.50.
A breakdown of the template revealed that for NNPC retail outlets and independent and major oil marketers, the Landing Cost of PMS imported into the country was N84.32 and N85.08 per litre respectively, It stated that the distribution margin, which include retailers, transportation, bridging fund and dealers margin, among others, stood at N14.30 for both the NNPC and other marketers.
According to the statement, this brings the current expected open market price to N98.62 and N99.38 for NNPC retail outlets and other marketers, respectively.
FG to announce new fuel price
But for government’s decision to pay subsidy, the Federal Government would have in the next couple of days, announced a new fuel price, with the product selling at between N100 and N105 per litre for both the Nigerian National Petroleum Corporation’s, NNPC, retail outlets and stations belonging to other oil marketers.
Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, had last month, during a visit to the Petroleum Products Pricing Regulatory Agency, disclosed that from May 2016, the price of Premium Motor Spirit would be reviewed to reflect current trends in the global petroleum industry.
Kachikwu had stated that the review in the prices was supposed to be done in April, but had to be suspended because of the fact that the country had been able to save a lot of money within the first three months of the year, adding that the savings would be used to fund the gap recorded in pricing in April.
The new price of the product would have been announced either by Kachikwu or by the Executive Secretary of the PPPRA .
The new price would be based on the PPPRA pricing template, which is the major indicator and basis of the Federal Government’s Price Modulation Mechanism.