Against the backdrop of the fall in
global oil prices, the landing cost of
Premium Motor Spirit, commonly
known as petrol, has dropped to
N82.57 per litre as of Thursday,
December 18, from N127.57 on
November 3.
The Federal Government’s spending
on petrol subsidy has, therefore,
fallen to a five-year low of N1.06 per
litre as of that, compared to N44.94
on November 3, according to data
obtained from the Petroleum
Products Pricing Regulatory Agency.
Subsidy refers to the money paid,
usually by government, to keep
prices below what they will
otherwise be in a free market
system.
For instance, the Expected Open
Market Price (retail price) of petrol is
N98.06 per litre as of December 18,
but the regulated price is N97. The
difference is subsidy.
As of November 3, the retail price of
petrol was N141.94 per litre,
according to the PPPRA.
Nigeria, Africa’s top oil producer,
relies on importation for most of its
fuel needs as the country’s refineries
are in a poor state. The fall in oil
price has triggered the decline in the
landing cost of petrol.
There have been calls in some
quarters on the government to
reduce the pump price of refined
petroleum products as the price of
crude oil, which constitutes a major
component in the pricing template,
have plunged by more than 45 per
cent.
Global benchmark Brent crude has
lost almost half of its value since its
mid-June spike of $115 per barrel,
hovering around $61 on Sunday. It
recently fell below $60 before
rebounding last week.
An executive in the Nigerian National
Petroleum Corporation, who
pleaded anonymity, gave an
indication as to why there had not
been a reduction in the pump price
of petrol in the country.
The executive explained, “Reduction
of the pump price of petrol doesn’t
happen like that because we don’t
know how long this fall in oil prices
will be. We had the same situation in
late 2008 and early 2009. Oil price
fell and we had over-recovery (a
situation whereby the total cost is
lower than the regulated price).
“So, the government went ahead to
reduce the pump price of petrol to
N65 from N70. The following day,
we started having subsidy again
because the oil price started
increasing. By April of that year, the
price had reached N140. So, the
market is such that we don’t know
what can happen next.”
The Managing Director and Chief
Executive Officer, Financial
Derivatives Company Limited, Mr.
Bismarck Rewane, had in November,
when the oil price was still above
$80, said that subsidy on refined
petroleum products would decline
from N2tn by almost 30 per cent.
According to energy specialist at
Ecobank, Mr. Dolapo Oni, the
weakening of the naira by low oil
prices has moderated the gain from
the 45 per cent decline in prices.
“While the spot price of West African
grade gasoline (which is much lower
than typical premium gasoline
blends in Europe) has fallen by
about 50 per cent, the increase in
value of the dollar has limited the
gains for Nigerian importers,” Oni
said two weeks ago.

www.punchng.com/business/business-economy/petrol-landing-cost-now-below-pump-price/

thankfully,we r nw seeing reasons 2 diversify. all hands mst b on deck 2 save d economy

SURE-P is about to be gone...
Fraud of the highest levels in Nigeria...