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| Crude oil prices have fallen by more than 70% since mid-2014 |
The continued fall in
crude oil price may lead to a further cut in the pump price of petrol by the
Federal Government any time soon, the outgoing Executive Secretary of the
Petroleum Products Pricing Regulatory Agency, Mr. Farouk Ahmed, has said.
The
Punch report continues:
The
PPPRA is the agency of the Federal Government that regulates and fixes prices
for petroleum products in the country.
The
agency had late December 2015 stated that the pricing template for petroleum
products would be reviewed occasionally to reflect fluctuations in the price of
crude oil in the international market.
While
handing over to the most senior officer of the PPPRA, Mr. Moses Mbaba, in Abuja
on Thursday, Ahmed noted that as of February 3, 2016, about one month after the
review of the pricing template of petrol, the country had saved ₦2.6bn as
over-recovery on the product.
He
was, however, quick to state that the value was low because some of the
over-recoveries were still arriving.
He
stated that the decision on the review of the pump price of Premium Motor
Spirit, popularly called petrol, would be taken next month by the Minister of
State for Petroleum Resources, Dr. Ibe Kachikwu, after due consultation with
stakeholders, and based on the price of crude oil in the international market.
When
asked if the price could be reduced in the future considering the fall in crude
oil prices, Ahmed said, “Yes, but wait till March and you will see. Because the
minister is fair in the decision he will take, and because he will take the
decision pragmatically.”
He
added that due to the current state of over-recovery, the PPPRA was recovering
some money from the Nigerian National Petroleum Corporation and oil marketers.
Ahmed
also noted that as of February 16, 2016, the country recorded over-recovery of ₦13.81
per litre of petrol, stating that this meant that the landing cost of PMS was
lower than the selling price by ₦13.81.
However,
as of the close of business on Thursday, the over-recovery had dropped to ₦11.74
per litre.
Ahmed
explained that on instances of over-recovery, the PPPRA usually sends notes to
affected marketers to refund the excess money to the government, adding that
the fund was being kept in an account that was recently opened at the Central
Bank of Nigeria.
He
said, “There has been an account launched at the CBN and being managed by the
Accountant-General of the Federation where the over-recovery funds are
deposited. So, there is no question of where the money goes to.
“As
of February 3, 2016, the estimate in that account, because we are verifying
based on what was imported, is just a small amount of about ₦2.6bn. But this is
just the beginning, because some of them were just arriving in December; that
is why the subsidy over-recovery is low.
“The
fact is that whatever money that will be put into that account, one day, which
is our hope that the price of crude oil will go up, there will be more revenue
inflow to the Federation Account. The oil sector will benefit. That excess,
before you go to the government for any intervention, you go to that account
and pull some money and compensate.”
He,
however, noted that the over-recovery might disappear if the price of crude oil
rises by next month.
Ahmed
stated that the process of the review of the pricing template would likely
commence by March 15, 2016, and the committee to undertake the review would
consist of all the stakeholders in the petroleum industry, including major and
independent oil marketers as well as depot owners.
The
outgoing PPPRA boss stated, “The recent price modulation mechanism and review
of the agency’s pricing template, which took effect from January 1, 2016, has
ushered in the much-needed efficiency and cost-saving as far as subsidy payment
exposure is concerned.
“This has partly led us to
a regime of over-recovery, enabling the government to collect money back from
the marketers into the designated over-recovery account at the CBN.”
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