The Petroleum Products Pricing Regulatory Agency, PPPRA, on Friday said the Federal Government was still subsidising the current pump price of petrol at N87 per litre.
This was disclosed in a statement issued in Abuja by PPPRA spokesperson, Lanre Oladele.
According to the Executive Secretary of the PPPRA, Farouk Ahmed, the price of crude oil dropped to a point lower than the open market price of petrol.
He explained that the government felt that it was 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.
“The price of crude oil averaged $62 per barrel in December, 2014, and dropped to an average of $50 per barrel for the first half of January, 2015,” he said.
Mr. Ahmed said that government reduced the pump price of gasoline, commensurate with the amount announced, after a consistent and diligent monitoring of the trend.
He explained that even at the lowest crude oil price of $47.23 per barrel recorded on January 16, 2015, the open market price of petrol was about the same as the former price of N97 per litre.
“What this means is that at the new price of N87 per litre, government is still subsidizing the pump price of petrol,” he stated.
He dismissed the argument that the price of crude oil had reduced by about 50 per cent and that the pump price of petrol must reduce in the same ratio.
According to him, crude oil price was only one of the several components in deriving the pump price of petrol.
“Therefore, there is no linear relationship between the price of crude oil and the pump price of petrol,” he said.
He said that the price of crude oil reached its peak of $114.26 per barrel on 18 June, 2014 and that the open market price of petrol was N157 per litre.
He said that government, however, maintained the price of N97 per litre and still subsidised the difference of N59.51 per litre.
Mr. Ahmed noted that in determining the amount of reduction on pump price of petrol, government was mindful of the impact that an upward swing in the price of crude oil would mean in the amount of subsidy exposure.