A Review of the Nigerian Energy Industry

‎Nigerians want more reduction in price of PMS to reflect global price slump

Fuel dispenser nozzle
Fuel dispenser nozzle

*Say they have not enjoyed benefits of subsidy programme

Oscarline Onwuemenyi

20 May 2015, Sweetcrude, Abuja – In spite of the ongoing scarcity, more Nigerians would want to see a further reduction in the price of Premium Motor Spirit – or fuel – from its current price of N87 per litre. This, they said, would be reflective of the recent slump in the international price of petroleum products, a poll has revealed.

The poll commissioned by BusinessDay Media and conducted by NOIPolls earlier in 2015 also revealed that slightly more than half (52 percent) of the respondents surveyed believe that Nigerians have not enjoyed the full benefit of petrol subsidy.

This perception may be guided by the fact that a larger proportion of Nigerians purchase petrol at a price above the subsidized rate of ₦97.

An assessment of the drop in the price of crude oil revealed that almost all (94%) the respondents who purchase petrol believe there should be a corresponding drop in the price of petrol in Nigeria to reflect the drop in the price of crude oil worldwide. To this effect, the larger proportion of the respondents (51 percent) suggested that the price of petrol should drop to a range of ₦51 – ₦70 as a result of the 50% drop in the price of crude oil.

Findings from the survey revealed that slightly more than half (52 percent) of Nigerians who purchase petrol believe Nigerians have not enjoyed the full benefit of the petrol subsidy and ‘corruption’ (66 percent) has been identified as the key factor hindering Nigerians from enjoying the full benefits of petrol subsidy among other factors.

More findings revealed that the slight majority (44 percent) of respondents surveyed would not support the total removal of petrol subsidy by the government, whereas 42 percent indicated that would support the full removal of petrol subsidy by the government to a great extent.

More findings revealed that ‘corruption’ is perceived to be the key factor hindering Nigerians from enjoying the full benefits of petrol subsidy as reported by the majority of respondents (66 percent) and this cuts across gender and geo-political zone.

“Given this set back, a significant proportion (42 percent) of Nigerians (especially from the South-East zone) would support the full removal of the fuel subsidy to a great extent.

“On the other hand, a slightly larger proportion (44 percent) would not support the full removal of petrol subsidy by the government; this stance was mainly maintained by residents from the North-East and North-West regions,” the pollsters noted.

An evaluation of the awareness and perception of Nigerians on the drop in global crude oil prices revealed that majority (71 percent) of Nigerians who buy petrol are aware of the drop in the price of crude oil by 50% worldwide.

As a result of this drop, almost all the respondents (94 percent) who purchase petrol believe there should be a corresponding drop in the price of petrol in Nigeria to reflect the drop in the price of crude oil worldwide. In line with this, the price of petrol dropped by ₦10 bringing the official price of petrol to ₦87 per litre as announced by the Government in January 2015.

In spite of this, the majority of Nigerians suggest petrol price should drop to a price ranging from ₦50 – ₦70 (an average of ₦59), to correspond with the drop in the price of crude oil worldwide. These are the key findings from the Consumer
Perception on Petrol Price and Subsidy poll conducted in January 2015.

On the contrary, six percent of Nigerians stated that the drop in the price of crude oil worldwide should have no effect in the price of petrol in Nigeria.

When averaged out, Nigerians suggest the price of petrol should drop to ₦59 to correspond with the current drop in the price of crude oil. In addition while residents of the South-West maintained an average price of ₦57 being the lowest among other regions, the South-South zone residents maintained an averge price of ₦63 being the highest.

After the announcement of the partial removal of fuel subsidy by the Federal Government of Nigeria on 1st of January 2012, Nigerian filling stations were mandated to sell petrol to consumers at the official price of ₦97. While this price reflects partial subsidy, surveys conducted by NOIPolls from 2013 to 2014 to monitor the price of petrol revealed that a high proportion of Nigerians purchase petrol above the official price, thus questioning the benefit of the fuel subsidy to Nigerians.

However, following the recent drop in the price of crude oil in the global market from an averaged $62 in December 2014 to an averaged $50 per barrel in the first half of January 2015, the Federal Government, through the Petroleum Products Pricing Regulatory Agency (PPPRA), announced a reduction in the pump price of petrol to ₦87 from the previous ₦97.

This was said to have been possible after the PPPRA made a consistent and diligent monitoring of the trend, since the beginning of the drop in crude oil price. In line with this a number of Nigerians, through the media have argued that the price of crude oil reduction in the global market has reduced by 50% and as such the pump price of petrol in Nigeria should reduce in the same ratio.

To gauge the perceptions of respondents on whether Nigerians have benefited from petrol subsidy, respondents were asked: In your opinion, do you think Nigerians have enjoyed the full benefit of petrol subsidy? Findings revealed that slightly more than half (52 percent) of respondents surveyed believe Nigerians have not enjoyed the full benefit of the petrol subsidy; this perception was highest among respondents whose ages range from 22-60 years. This perception may be guided by the fact that several Nigerians purchase petrol at a price above the subsidized rate of ₦87 as previously established by NOIPolls.

However, about 48 percent indicated that Nigerians have enjoyed the full benefit of the petrol subsidy, especially by the North-East residents, as well as respondents within the age groups of 18-22 years and 61+.

Analysis by geo-political zone reveals that the South-East zone has the highest percentage of respondents who would support the petrol subsidy removal to a great extent. The South-West zone accounted for the largest proportion of respondents who would support the total removal of the fuel subsidy to some extent while, the North-West zone has the larger share of respondents who would not support full subsidy removal by the government.

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