Govt okays N80 per litre for petrol

Govt okays N80 per litre for Petrol
Posted to the Web: Monday, August 22, 2005
culled fromhttp://www.vanguardngr.com/articles/2002/headline/f122082005.html


LAGOS — THERE are indications that government may have given the Nigerian National Petroleum Corporation (NNPC) the go-ahead to increase its ex-depot price of petroleum products which will lead to petrol being retailed at an unprecedented pump price of N80 per litre this week.

The Federal Government through the Pipelines and Products Marketing Company (PPMC) has ordered an increase in the price of Low Pour Fuel Oil (LPFO) by about 249 per cent from 12 to N30.40 per litre, amounting to about 249 per cent increase.

The international community and energy agencies, last week also revised upward their prediction of oil prices, stating that prices may rise further with an average of $67 per barrel for the rest of the year and beyond. This means that Nigeria will earn more revenue in crude oil export which will further boost its external reserves going by the decision of government not to spend excess crude earning.

Vanguard gathered that the Presidency may have given the nod for the price increase after it dawned on it that the corporation might not be able to pay salaries at the end of the month should the current level of subsidy burden borne by the corporation persist.

Specifically, it was gathered that owing to the experience of the past, government has given the go-ahead for the pump prices of petroleum products to be placed well above cost reflective prices to make room for bargaining with labour during negotiations that will ensue.

The increase in pump prices which has been a subject of public speculation for sometime now is expected to come after a board meeting of the Petroleum Products Pricing and Regulatory Agency (PPPRA) tomorrow.

Contacted, Dr. Oluwole Oluleye, Executive Secretary of the Agency said he did not expect any upward review in pump prices to occur before the board meeting tomorrow.

Responding to a question on NNPC’s possible unilateral move to change its ex-depot price, he admitted that it was within the corporation’s right to do so, adding, however, that this could only be done up to a point, and not beyond that reflecting cost.

It was gathered that the increase will see the ex-depot price of Premium Motor Spirit (PMS) pegged at N71 per litre, Automotive Gas Oil (AGO) pegged at N76 per litre and Dual Purpose Kerosene (DPK) left largely unchanged.

A Presidency official who pleaded anonymity explained that the only change in DPK price would be the incorporation of expenses incurred during local shipment and trans-shipment of cargo, adding that this is yet to be worked out.

Currently, the corporation’s ex-depot price of Premium Motor Spirit (PMS) is N43:50 per litre, Automotive Gas Oil (AGO) is put at N53:00 per litre and Dual Purpose Kerosene (DPK) is put at N43:50 per litre.

The market fundamentals as at last Friday showed that given an exchange rate of N132:88K to the dollar, the landed cost of PMS is N65:61K per litre, with an open market or pump price of N72:11K per litre, while the landed cost of AGO is put at N70:66K, with a pump price of N77:16K per litre.

The market fundamentals also indicated that the landed cost of DPK is N72:85k per litre with a likely pump price of N79:35K per litre.

Increase in LPFO price

Responding to the increase in the price of LPFO, the Manufacturers Association of Nigeria (MAN) and the National Union of Textile Garment and Tailoring Workers of Nigeria (NUTGTWN) urged the Federal Government to immediately reverse the price hike. In a letter dated August 17, 2005 and addressed to the marketers, the PPMC management said: "Please be informed that effective from today (August 17), the new ex-depot price of LPFO is now N30.30 per litre. Please be guided accordingly."

Prior to this latest increase, marketers were loading black oil which now costs N1.003 million ex-depot at N402,930. Manufacturing industries, including textile, breweries and cement factories use black oil to generate steam that drives their operational plants. Chairman of the textiles sector of MAN, Senator Walid Jibrin however, warned in an interview in Kaduna that the latest hike in the price of black oil would eventually lead to a total collapse of the textile industry in the country which he described as the second largest employer of labour aside fromgovernment.

"This price hike is the final straw that will break the camel’s back, given the textile industry’s accumulated problems of high production cost, smuggling and poor marketing situation.

The textile industries all over the country have been struggling to survive in the face of high cost ofproduction, high water rates, increasing power bills, poor power supply and dwindling share of the domestic market, due to smuggling and dumping of foreign textile products.

The United Nigeria Textiles Limited (UNTL) which has 10,000 workers is the only survivingtextile firm in Kaduna, out of the previous nine."Also reacting to the price hike, the NUTGTWN warned in a statement that the hike in the price of black oil would spell doom not only for the textile industry but also the nation’s economy as a whole.
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Nairalanders what does this portend for the future of this country? Share your views and opinions.

 
 
 

Obasanjo's govt. has increased pump price for about six times now in six years in office.

I go move out of this Country oo. I am tired of everything. For how long to endure all these?

Again, Nigerians are being asked to subsidize bureaucratic inefficiency.  With Petrol now costing about $0.60/litre, its the most expensive in OPEC community. I wonder where the benefit is for Nigerians if we have to pay the same pump price as other countries importing from us. I dont live in the US, but it seems that petrol in Nigeria (producer)  is now more expensive than US (importer).

the average pump price of petrol in the USA is $2.20 per gallon or 50 something cents. Petrol in nigeria is now costlier. The average per capita income of the USA (huge importer from nigeria) is over 40 times that of nigeria. Which way nigeria?

The reality is that crude is getting mroe expensive on the global scale, bear in mind that we import the refined oil and export the crude, we are able to peg out crude pricee, while that cannot be said of the refined oil. I pay $2.60 cents for a gallon of oil, compared to about $1.40 a year ago. I am for the market determining the price of oil. I was in Naia two weeks ago, oil is hetting high everywhere. Venezuela is also threatening to cut US oil supply, that could also increase the oil price. That is just life and we have to deal with it. uNTIL WE START TO REFINE OUR OWN OIL IN NAIJA, we will be affected by the global increase in the price of oil.

@ Hunter

Nigerians are not paid on a global scale. i told you b/4 the minimum wage is about $55 a month

Problem is with comparing wages is that when they import it they still have to pay the same amount they would if they were buying it in another country, a retailer would be crazy to sell it at such a heavy loss wouldn't they?

Price's I give are usually in AUD unless otherwise stated.

i bought fuel today at N70 a litre in Port Harcourt, this is for the records.

am not totally against the increase. i will say more later.

i wouldn't want to go over this again, am pasting an excerpt from my blog (joftech.blogspot.com):

1.) To pay for that new mansion in Jupiter Island, Florida.
2.) To shore-up that bank account in Cayman Island.