- The importation of Premium Motor Spirit (PMS) into Nigeria is to gulp extra cost of over N2.369 billion per day from federal government and marketers
- This is because the landing cost for fuel has soared to N212.7 per litre
- This came as oil prices hit their highest levels since July 2015
The importation of Premium Motor Spirit (PMS) into Nigeria is to gulp extra cost of over N2.369 billion per day from federal government and marketers.
According to New Telegraph, this is because the landing cost for fuel has soared to N212.7 per litre
This came as oil prices hit their highest levels since July 2015 with Brent reaching $58.37 and $55.24, before paring gains on the strong dollar.
Buoyed by this, the federal government is already mulling total deregulation of the downstream sector.
While the modulated bracket of N135-N145 is given as official price for fuel, the report states that extra N67.7 is incurred on over 35 million litres daily imports as the landing cost soared to N212.7 per litre.
“When oil price was at $52 dollars per barrel, the landing cost was N165 per barrel, later when it was $55, the price soared to N210 per litre,” a financial analyst said.
Now that it is $58 per barrel, the landing cost hovers around N213 per litre, the report stated.
The Central Bank of Nigeria (CBN) had earlier asked banks to submit bids for a “special currency auction” to clear the backlog of matured outstanding dollar obligations for petrol importers and selected sectors of the economy.
Meanwhile, the Petroleum Products Pricing Regulatory Agency (PPPRA), an agency saddled with pricing regulation, has taken down its website, keeping the public in the dark on change in pricing template for petroleum product.
Spokesperson for the agency, Lanre Oladele, could not be reached for comments.
Earlier estimates from the PPPRA showed that Nigeria needs an average of $500 million every month to import refined petroleum products, since all of its three refineries are currently producing at less than 25 per cent of their installed capacity.
The price of PMS could surge to over N220 per litre if the new realities of the oil market are taken into consideration.
Recently, the minister of state for petroleum resources, Dr Ibe Kachikwu, confirmed in a paper presented at a forum in Lagos that the federal government had a goal to deregulate the downstream sector of the petroleum industry.
He stated that though the government was not there yet, it would continue to fine tune the process until the goal is achieved.
“At every given time in the history of every country, you will always have partial deregulation. The reason being that you have to catch up each time and make an amendment, and even if it is just one day, you might have some level of subsidy for that one or two days before it is removed.
“What is important is the goalpost; where are we headed? Where we are headed is to try and free the industry, so that it makes do with its own rules, set its own prices itself. There are few mechanics that we still need to get in place properly.
“We can’t forget the fact that we still have foreign exchange challenges and that income to government is still very tight.
“You still have to find a way to balance that. But what is important is what the objective is.
“The objective is still to fully deregulate to find private capital to get them to where they should be,” Kachikwu told his audience.
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In a related development, the Nigerian National Petroleum Corporation (NNPC) has now approved a list of firms that are allowed to lift crude oil from Nigeria from 2017 to 2018.
The list is 39 firms strong including 18 Nigerian companies, 11 international traders, 5 foreign refineries, 3 National Oil Companies (NOCs) and 2 NNPC trading arms.