FG Removes Subsidy, As Cost of Petrol Drops To N85/Litre Jan. 1

Nigeria (Blank NEWS Online) – 

Nigeria’s Federal Government has announced a-two-naira cut from the current pump price of N87 per Litre of petrol making the product to sell at N85 per Littre and also scrapped the controversial fuel subsidy regime with effect from Jan 1, 2016.

Minister of State for Petroleum, Dr. Emmanuel Ibe Kachikwu, who made the disclosu’re while inspecting the the Port Hacourt Refinery Company (PHRC) plant on Friday, December 25, said the present realities in the crude market had necessitated the need to end the subsidy regime.

He said the Federal Government would soon release the new price template of the Petroleum Product Pricing Regulation Agency (PPPRA).

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.”

He emphasised that recent government’s analysis and research indicates that the country can fluctuate the fuel market in accordance with the crude oil market fundamentals.

Kachikwu explained that government can no longer afford to subsidize the product following the fraud that has attended the operations of the Petroleum Support Fund otherwise known as oil subsidy.

“It is out. I signed off on it (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 off 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 off. The second is the earning capacity of the Federal Government is deteriorating by the day with lower prices of crude and come out more.”

He said from the briefing he got from the inspection of the refineries , they are close to re-opening. “In the next one week, we are ready to see products out of here.”

Kachikwu, however revealed 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 is required in the factory.

According to him, “about 5.5million litres daily of PMS is expected from the refinery in the next few days. Other products to come from the plants 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. And that is doing 60 per cent performance. This is still an assumption. I will like to see them getting closer to 80 or 90. By the time they do that we will be getting 11 to 12 million litres out of this place.”

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