The minister of State for Petroleum Resources, Ibe Kachikwu, on Thursday denied that the government was planning to raise the pump price of petrol to N97 a litre from January 2016.
Mr. Kachikwu, who doubles as Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, said in Abuja that the plan is for a more scientific price modulation arrangement that would make prices elastic and allow them to be reviewed periodically to reflect the impact of the prevailing crude oil price at the international market.
When operational, he said the new arrangement would place a N97 per litre cap on the price of fuel to ensure that Nigerians were insulated from the vagaries of the up and down movements in global crude oil price at the international market.
“I did not say that refined petroleum products will sell for N97 per litre next year,” he explained. “What I said was that between a band of N87 and N97 per litre of petrol, we are going to be looking at fuel prices. Today, fuel prices are largely close to N87 per litre. So, there is no need to change the price at the pump.’’
To determine the price of petroleum products in future, the minister said t the Petroleum Products Pricing Regulatory Authority, PPPRA, the government agency responsible for regulating the petroleum products prices in the country, would undertake quarterly reviews of the crude oil market situation to determine the current fuel price.
“I have not put a static figure on what the new fuel price would be. PPPRA will have to do the calculations to be able to announce what the price of PMS will sell in January. But, we do not anticipate any major shift, because of the price of crude oil today,’’ he said.
Latest PPPRA petroleum products pricing template on December 17, 2015 showed total retail petrol price at N90.60 per litre, an indication that the current level of subsidy by the government dropped to N3.60 per litre.
With crude oil price at the end of trading on Thursday at the New York Mercantile Exchange (NYMEX) declining further by 1.75 per cent, from $35.52 per barrel to N34.90, close watchers of the price movements at the international oil market say the price at the pump was likely to drop further in the near future.
The world’s leading crude oil producers, particularly the Organisation of Petroleum Exporting Countries (OPEC), are not helping matters a bit, as they appear to have stuck to their decision not to intervene, by cutting their production ceilings to strengthen crude oil price and stabilize the market.