Forex Problems Caused N145 Petrol Price – FG

The Federal Government, yesterday, hiked the price of Premium Motor Spirit, PMS, also known as petrol, directing marketers to sell at between N135 and N145 per litre. Government also stated that any Nigerian firm could now import the product, subject to existing quality specifications and other guidelines issued by regulatory agencies.

In a statement in Abuja, the Petroleum Products Pricing Regulatory Agency, PPPRA, the agency responsible for determining products prices in the oil sector, said the decision to allow marketers fix the price within the new price band of N145, became imperative in the face of extreme difficulties faced by importers in sourcing foreign exchange.

According to the PPPRA, to meet the consumption demand of the country, importers will henceforth be permitted to source for their foreign exchange requirements from secondary sources.

In the statement signed by Acting Executive Secretary, Mrs. Sotonye Iyoyo, the PPPRA said with immediate effect, the new price band for PMS shall be at a maximum of N145 per litre, noting, however, that NNPC retail stations on the outskirts of major cities were advised to sell at a price lower than N145 per litre.

She said: “We are conscious of the difficulties that Nigerians have been going through in the last few months, and to ameliorate this situation, we shall continue to modulate pricing in accordance with prevailing market dynamics, thereby ensuring fair value to all citizens.”

Also, briefing newsmen at the State House, Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, yesterday, defended the jerking up of pump price of PMS, saying it was the only way out of the exorbitant prices of between N150 to N250 which Nigerians are subjected to at filling stations across the country. He stated that the new policy would lead to improved supply and competition and eventually drive down pump prices, as experienced with diesel.

In addition, he argued that the increased price would also lead to increased product availability and encourage investments in refineries and other parts of the downstream sector, while it would also prevent diversion of petroleum products and set a stable environment for the downstream sector in Nigeria. He, however, stated that Federal Government had articulated many social protection programmes in the 2016 budget to cushion the effect the hike might have on Nigerians.

Rising from a meeting chaired by Vice President Yemi Osinbajo, which also had other stakeholders, including the leadership of the Senate, House of Representatives, Nigerian Governors Forum, and Labour Unions (NLC, TUC, NUPENG, and PENGASSAN), at Aguda House, official residence of the Vice President, Kachikwu said: “The reason for the current problem is the inability of importers of petroleum products to source foreign exchange at the official rate due to the massive decline of foreign exchange earnings of the Federal Government.

“As a result, private marketers have been unable to meet their approximate 50 per cent portion of total national supply of PMS.” Highlighting contents of the briefing, Kachikwu said: “We have just finished a meeting with various stakeholders presided over by His Excellency, the Vice President. The meeting had in attendance the leadership of the Senate, House of Representatives, Governors Forum, and Labour Unions (NLC, TUC, NUPENG, and PENGASSAN).

“The meeting reviewed the current fuel scarcity and supply difficulties in the country; exorbitant prices being paid by Nigerians for the product, ranging, on the average, from N150 to N250 per litre currently.

“The meeting also noted that the main reason for the current problem is the inability of importers of petroleum products to source foreign exchange at the official rate due to the massive decline of foreign exchange earnings of the Federal Government. As a result, private marketers have been unable to meet their approximate 50% portion of total national supply of PMS.

“Following a detailed presentation by the Minister of State for Petroleum Resources, it has now become obvious that the only option and course of action now open to government is to take the following decisions: NEW FUEL PRICE—Minister of State, Petroleum, Dr. Ibe Kachikwu, briefing newsmen on the new fuel price, yesterday, in Abuja.

“In order to increase and stabilise the supply of the product, any Nigerian entity is now free to import the product, subject to existing quality specifications and other guidelines issued by regulatory agencies.

“All oil marketers will be allowed to import PMS on the basis of FOREX procured from secondary sources and accordingly PPPRA template will reflect this in the pricing of the product. “Pursuant to this, PPPRA has informed me that it will be announcing a new price band effective today, May11, 2016 and that the new price for PMS will not be above N145 per litre.

“We share the pains of Nigerians but, as we have constantly said, the inherited difficulties of the past and the challenges of current times imply that we must take difficult decisions on these sorts of critical national issues.

“Along with this decision, the Federal Government has in the 2016 budget made an unprecedented social protection provision to cushion the current challenges. We believe in the long term, that improved supply and competition will drive down prices.

“The DPR and PPPRA have been mandated to ensure strict regulatory compliance including dealing decisively with anyone involved in hoarding petroleum products.”

(Vanguard)