Federal government officially stops payment of subsidy on petrol

The absence of the usual subsidy component in the
latest Petroleum Products Pricing template from the
Petroleum Products Pricing Regulatory Agency,
PPPRA, has indicated the federal government’s
decision to officially stopped paying subsidy on the
premium motor spirit, PMS, better known as petrol.
The official pricing template for petrol by the PPPRA
as of December 28, 2015 saw the Federal
Government subsidising the product by N6.45 per
litre when the Estimated Open Market Price, EOMP,
at that time was N93.45. This was N6.45 higher
than the then retail price of N87 per litre.
The EOMP is the summation of the landing cost of
petrol and subtotal margins which include
transporter’s cost, dealer’s charge, bridging fund,
administrative charge, etc. This, to experts, makes
EOMP the true cost of the product.
On the revised template, the EOMP set by the
government agency that regulates the prices of
petroleum products in the country is now N84.78 for
NNPC fuel stations and N85.1 for stations run by
other oil marketer companies.
Prior to the release of the revised template, the
EOMP was usually higher than the retail/pump price
of petrol at filling stations, with the federal
government paying the difference between the retail
price and the EOMP as subsidy to oil marketers.
With the new EOMP being lower than the retail price
of N86.5 set by the Federal Government as what
petrol should be sold nationwide, this means that
Nigerians are paying an extra N1.4 for the
commodity whenever they buy PMS at non-NNPC
run petrol stations and N1.22 extra for every litre of
petrol bought at NNPC-run filling stations.
Last Tuesday, the PPPRA had, after getting approval
from the Federal Government, announced that retail
fuel stations belonging to the NNPC would from
Friday, January 1, 2016 sell petrol at N86 per litre,
while other oil marketers would sell the commodity
at N86.5 per litre.
It explained through its Executive Secretary, Mr.
Farouk Ahmed, that the reduction in the price of the
commodity was due to the implementation of the
revised components of the petroleum products
pricing template for PMS and Household Kerosene.