29 December 2015, Abuja – The official pricing template for Premium Motor Spirit, otherwise called petrol, by the Petroleum Products Pricing Regulatory Agency on Monday showed that the Federal Government was still subsidising the product by N6.45 per litre.
This is despite claims by the Minister of State for Petroleum Resources, Dr.IbeKachikwu, who on Sunday stated that petrol was currently not being subsidised by the government.
Although the latest update on the PPPRA template was done on Friday, December 25, it showed that the Expected Open Market Price for petrol was N93.45 per litre as against an official retail pump price of N87 per litre.
This indicates that the Federal Government is still subsidising the commodity by N6.45 for every litre consumed across the country.
According to the template, the EOMP comprises of the landing cost of N77.96 per litre of the product and the subtotal margins of N15.49 per litre.
The landing cost is made up of trader’s margin, N1.47; lightering expenses, N4.07; Nigerian Ports Authority cost, N0.77; financing, N0.51; jetty through put charge, N0.8; storage charge, N3; and commodity plus freight charge, N67.34.
For the cost elements that make up the subtotal margins for each litre of petrol, the template showed that retailers cost was N4.6; transporters’, N2.99; dealers’, N1.75; bridging fund, N5.85; marine transport average, N0.15; and administrative charge, N0.15.
A combination of all the above figures showed that the EOMP of petrol is N93.45, against a retail pump price of N87 per litre, leaving a subsidy of N6.45 for every litre of PMS.
Kachikwu, who doubles as the Group Managing Director of the Nigerian National Petroleum Corporation, had told journalists in Kaduna on Sunday that the government was currently not paying subsidy on petrol.
“Today, there is no subsidy; we are selling the product at N87; in January, we will look at what the trend is, we will announce (a new) price if that is less than N87; we will announce it and if it is more than that, we will have to announce it,”the minister had said.
Some senior officials of the Petroleum ministry, who spoke on the development, stated that the minister might have made the assertion based on the move to review the PPPRA pricing template.
The officials, who did not want to contradict their boss, argued that the new template would show that subsidy had been gradually stopped, stressing that this was as a result of the fall in crude oil prices.
“I believe that the GMD has seen the new template and that was why he made that statement, but that does not mean that the current template of the PPPRA should be disregarded because it is the basis for any other pricing mechanism,” one of the officials, who pleaded not to have his name in print, said.