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FG: No Fuel Price Reduction For Now

Oil Marketers Demand Payment Of N400 Billion Subsidy Debt Owed Them By The Federal Government Which Has Also Ruled Out Possibility Of Reduction In The Pump Price Of Petrol Despite Drop In Global Oil Price


Federal Government yester­day dashed hopes cutting the pump prices of petroleum products as oil marketers in the country swooped on it for pay­ment of outstanding N400 billion subsidy arrears inherited by the pre­sent administration.

At a meeting yesterday with the Group Managing Director of Nige­rian National Petroleum Corpora­tion (NNPC), Dr. Ibe Kachikwu, key marketing groups in the nation’s fuel market demanded immediate pay­ment of the outstanding subsidy ar­rears to enable them to meet the im­minent demand rise associated with yuletide season.

At the meeting, NNPC whose earn­ings plunged by 67 percent in the first half of the year, ruled out reduction in retail prices of various petroleum products in the country despite the clear over-recovery at the pumps.

The UNION reports that NNPC and sister Petroleum Products Pric­ing and Regulatory Agency (PP- PRA) had at the peak of high crude oil prices justified high retail prices of imported fuel in the country on knock-on effect from high crude oil prices at the international market.

Platts Market analysts who visited Nigeria recently had listed high re­fining margins and low pump prices of refined petroleum products across the globe as the major economic ben­efits of the falling prices of crude oil.

They said low crude oil prices and associated slide in the prices of re­fined petroleum products had raved up profits and prosperity of industries and citizens respectively, pointing at fuel affordability and rising demand as necessary drivers for investment in the industry.

The analysts who hosted global oil market observers at a seminar at Eko Hotel, Lagos, described the reten­tion of high pump prices in Nigeria and other West African countries as anomaly.

In its campaign promises, the All Progressive Congress (APC) had chided the defeated Peoples Demo­cratic Party (PDP) led government of retaining high pump prices pe­troleum products despite sharp fall in the prices of crude oil in the mar­ket.

The APC sailed on promises of huge social charity packages for the masses to success at the polls. Thus, expectations of cheaper fuel in the country under the prevailing crude oil price slump were high when the APC won the presidential elections last May.

Last night the spokesman of NNPC, Mr. Ohi Alegbe, debunked reports in some social media of a purported reduction in current pump price of petrol from N87 per Litre to N57, describing the report as false.

He advised members of the public to ignore expectations of fuel price reduction, noting that the price of petrol remains N87 per litre.

A source at the corporation how­ever confided in The UNION that government was actually over-re­covering from the market, adding that margins at the pumps would be used to augment the revenue gaps created by acute fall in crude oil prices.

He said the cyclical nature of the crude oil market also implies that government must observe the export market for signs of low price stabil­ity before cutting local pump prices to reflect the global market realities.

Asked why government was not following the trend in other coun­tries, our source explained that adjustment of fuel pump prices in Nigeria is a major economic phe­nomenon that carries huge social in­terests that are not easily controlled. He said once the price is reduced it might not be easy to raise again without contending with social op­position.

Leaders of the market groups that met with NNPC also supported re­tention of the pump prices to enable

government muster enough funds to offset outstanding N400 billion sub­sidy arrears to them.

Some of the leaders who spoke separately with The UNION said payment of the outstanding arrears would be critical to fuel supplies during the fast approaching yuletide period.

Mr. Ohi Alegbe, in a statement said the agreement on imminent payment of the subsidy debt was a major outcome of the meeting, say­ing it was a major step towards en­suring zero fuel queues throughout the country ahead of the forthcom­ing yuletide and beyond.

He said the key downstream op­erators reached a consensus to work together to eliminate all obstacles that could hamper the free flow of petroleum products across the coun­try.

Dr. Kachikwu told the marketers that “government is willing to do everything possible to ensure that members of the public do not go through any form of hardship in ac­cessing petroleum products particu­larly PMS.”

He promised to work with other relevant government agencies to fast

track the payment of the outstand­ing subsidy debts, promising in the interim to arrange for a meeting with the relevant creditors (bankers) to ease off pressure on marketers and extend the credit lines.

He noted that several financing mechanisms are being explored to offset the commitment to oil mar­keters. “In future we may explore some creative means to prevent backlogs.’’

Speaking on behalf of Major Oil Marketers Association of Nigerian (MOMAN), Mr. Femi Olawore, who is the Secretary General of the group pledged the readiness of the marketers to work with government to keep the fuel market wet.

Mr. Olawore called on Dr. Ka- chikwu to facilitate the institution of a special committee to verify and au­thenticate the current national PMS consumption figure of 40 million litres per day.

Also Chief Dapo Abiodun, Chairman of Depot and Petroleum Products Marketers Association (DAPPMA) urged NNPC to sustain improved services at various PPMC product loading facilities.


– Sopuruchi Onwuka

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