Nigeria’s Federal Government has taken advantage of low prices of crude oil in the international market to end subsidy of premium motor spirit as it revealed on Friday that the price of the product will go down to N85 from N87 per litre as from 1 January, 2016.
The Minister of State for Petroleum, Dr. Emmanuel Ibe Kachikwu broke the news to journalists in the Port Hacourt Refinery Company (PHRC), where he spent Christmas inspecting the plant.
Asked when the Federal Government would release the new price template of the Petroleum Product Pricing Regulation Agency (PPPRA), he said that he approved the new price for the agency on Thursday.
Pressed to reveal when the new price will become effective, Kachikwu, who is also the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) said
“Like I said, we have done a modulation calculation and it is showing us below N87. I imagine that if PPPRA publishes it today, it will become effective immediately. But the 1st of January that is when we are looking at.”
According to him, the new price is below the current N87 per litre and it would now convince Nigerians that the pricingmodulation that the Federal Government promised to embark on a few days ago was not a gimmick.
He noted that following government’s analysis and research, it has been realized that the country can fluctuate the fuel market in accordance with the crude oil market fundamentals.
Justifying government’s reasons for scrapping the Petroleum Support Fund otherwise known as oil subsidy, Kachikwu explained thatgovernment can no longer afford to subsidize the product following the fraud that has attended its operation.
“We can’t even understand where those subsidies were going to. There is a lot of fraud elements in it so we need to cut that of.
“The second isthe earning capacity of the Federal Government. It is deteriorating by the daywith lower prices of crude.”
He submitted that from the application of market realities for the pricing modulation, government has discovered that petrol would sell for either N85 or N86 per litre.
The minister recalled that it was from this axiom that President Muhammadu Buhari announced that the price of petrol remains N87 at the moment.