A litre of petrol also known as Premium Motor Spirit (PMS) may soon sell for N234 per litre, the group managing director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Malam Mele Kyari, has said.
He said the new price is being contemplated because the corporation can no longer sustain the monthly subsidy of N120 billion ($263,248 million) in dispensing the product at the current rate. Depending on the location, PMS at present sells for between N163 and N165 per litre.
Kyari gave hint of the new price at the fifth edition of the special ministerial briefings coordinated by the Presidential Communication Team in Abuja, yesterday.
He said the NNPC absorbs the cost differential which is recorded in its financial books.
Kyari said while the actual cost of importation and handling charges amounts to lN234 per litre, the federal government sells it at N162 per litre.
He stated that the NNPC could no longer afford to bear the cost, adding that sooner or later Nigerians would have to pay the actual cost for the commodity.
Kyari said the NNPC pays between N100 and N120 billion a month to keep the pump price at the current level, insisting that market forces must be allowed to determine the pump price of petrol in the country.
According to him, “Today, NNPC is the sole importer of petrol. We are importing market price and we are selling at N162. Looking at the current price situation, the market price could have been between that N211 and N234 per litre.
“The meaning of this is that the consumers are not paying for the full value of PMS that we are consuming and therefore the NNPC is bearing that cost. As at today, the difference is being carried in the books of the NNPC and I can confirm to you that the NNPC nay no longer be in a position to carry that cost.
“That is why early last year, you will recall the full deregulation of PMS and we have followed this through until September when the price shifted above N145, disputes came up between us and the trade unions and the civil societies leading to an engagement between us and organised labour which prevented the implementation of the actual price of the petroleum product at that time.
“These engagements are continued and the objective of the engagement is actually not to prevent the implementation but to make sure there is sufficient framework on ground to ensure that consumers pay for the actual price of this product and that they are not exploited.
“Second, it is to also put some reliefs such that the potential effect of the fuel price increase is not transferred to the ordinary people. Part of this is to deepen the auto-gas programme.
“With auto-gas programme, we will be able to deliver alternative fuel for vehicles including Keke NAPEP so that the price per litre equivalent will probably be half of the PMS at its current price.
“So, as we speak, I will not say that we are in a subsidy regime but we are in a situation where we are trying to exit the underpriced sale of PMS until we come to the full value of the product in the market.
“We want to use this opportunity to tell you that PMS today sells above N200 across our borders and in some places about N500 to a litre. In some countries, the Nigerian fuel is their territory fuel and we are supplying almost everybody in the West African sub-region.
“We cannot continue to afford this because we have our own issues. That’s why the eventual exit from this is completely inevitable. When that will happen I don’t know but I know that some engagements are going on; the government is concerned about the natural impact of price increase on our transportation and other consumer aspects of our society,” he said.
On the exact amount the NNPC is subsidising fuel monthly, Kyari said, “Our current consumption — evacuation from our depots is about 60 million litres per day. We are selling at N162 per litre. The current market price is N234. The difference between the two, multiply by 60 million litres will give you amount per month.
“This is a simple arrangement you do. If you want the exact figures from our books, I do not have them from this moment but it’s between N100billion and N120billion per month. We are putting the difference in the books of NNPC and we cannot continue to bear that.
“Today, NNPC is the sole importer of PMS. We are importing at market price and we are selling at N162 per litre today. Looking at the current market situation, the actual price could have been around N211 that you mentioned and around N234 per litre.
“The meaning of this is that consumers are not paying for the full value of PMS that we are consuming and, therefore, somebody is bearing that cost. As we speak, the difference is being carried in the books of the NNPC and I can confirm to you that NNPC may no longer be in a position to carry that burden because we cannot continue to do so,” he said.
On his part, the minister of state for petroleum, Chief Timipre Sylva, dismissed insinuations that the Port Harcourt Refinery is archaic.
On why the government is investing $1.5 billion on the rehabilitation of refinery when at the same time it is talking of privatisation and commercialisations, the minister said, “I have always said that our refineries cannot survive under the regime of subsidy because you cannot be refining at a cost and selling at a subsidized rate.