The
Petroleum Products Pricing Regulatory Agency’s Executive Secretary, Farouk
Ahmed, reportedly announced, at a press briefing in Abuja on 29th December,
2015, that a revised template for fuel pricing had been approved by the Agency;
the announcement was evidently the formal manifestation of the ‘modulated
pricing’ model earlier canvassed by Ibe Kachikwu, the NNPC CEO and current
Minister of State for Petroleum. Thus, with the adoption of the new template,
petrol price will be reduced from N87 to N86 in NNPC filling stations, while
other marketers would sell at a pump price of N86.50/litre.
However,
in contrast to the previous static cost template, fuel prices would henceforth
be reviewed quarterly to reflect fluctuations in any cost variable. Indeed,
Kachikwu had also corroborated the thrust of the new template when he
emphasized in an earlier press briefing in Kaduna on December 2015 that “we are
not going to be fluctuating prices day to day, we are going to take like an
average, and I think that today when you look at the prices, we have no
subsidy, because prices remain low and that is what we need to do”.
Kachikwu’s statement probably suggests that the reviewed fuel price has fallen below the existing subsidy threshold of N87/litre; consequently, government decided to pass on between N1 and 50Kobo/litre discount on petrol prices to the public, despite the oppressive N2Tn projected loan required to fund 2016 budget deficit. The PPPRA’s modulated response to fuel pricing is allegedly a demonstration of government’s “honesty in being able to sell products to Nigerians at affordable prices that make sense”. Nonetheless, the Minister is certain that we still need to get out of the subsidy debacle, because, according to him “the reliability and affordability of subsidy are issues we need to get away from, whether or not you believe in subsidy”.
Kachikwu’s statement probably suggests that the reviewed fuel price has fallen below the existing subsidy threshold of N87/litre; consequently, government decided to pass on between N1 and 50Kobo/litre discount on petrol prices to the public, despite the oppressive N2Tn projected loan required to fund 2016 budget deficit. The PPPRA’s modulated response to fuel pricing is allegedly a demonstration of government’s “honesty in being able to sell products to Nigerians at affordable prices that make sense”. Nonetheless, the Minister is certain that we still need to get out of the subsidy debacle, because, according to him “the reliability and affordability of subsidy are issues we need to get away from, whether or not you believe in subsidy”.
