The Federal Government has disclosed that a new pump price of fuel would become effective on January 1, 2016.
Dr. Ibe Kachikwu, Minister of State for Petroleum made the new price known at the Port Harcourt Refinery shortly after taking a tour of the facility on Friday.
The minister said that following the completion of an analysis taking into cognizance the current reality in the oil market, the new pump price would likely be either N85 or N86 from January 1, 2016.
Kachikwu, who stated that he signed off on the Petroleum Product Pricing Regulatory Agency (PPPRA) template on Thursday, said marketers would be advised regarding the new price in a couple of days as the PPPRA would adjust its pricing template.
He said: “The new PPPRA template was signed off (Thursday). In the next couple of days, marketers will be duly advised. Pricing is not a gimmick, we have to reflect these prices to reflect realities of the crude market. The objective is two-fold: One, we cannot afford to continue to subsidise when we can’t even understand where those subsidies are going to. There’s a lot of fraudulent elements involved and we have to cut that off.
“Secondly, the earning capacity of government is deteriorating by the day due to lower prices of crude. So applying that, what we landed when we did our analysis for the first time was about N85 or N86; so it’s below N87.”
Asked specifically when the new pump price will become effective, the minister said, “it will be more like 1st of January, 2016.”
Kachikwu also disclosed that having failed to reach their expected levels of operations, the Warri and Kaduna refineries would be producing on part-time bases, while the government would seek for third party financers to fund them.
Ruling out a possible sale of the refineries, the minister said, “My assessment today is that Kaduna is up. Port Harcourt is coming up, but not at the level where they would not need help. We will likely see both Warri and Kaduna, not shut down, but we are going to work for mechanisms whereby they can keep producing on a part time basis.
“We are going to bring in third party financials to help us put money into them, get them holistically where they should be and then work out the payment structure. The issue of sale is not within my authority that’s for the Federal Executive Council (FEC) and the President to take a decision on. But my position is that irrespective of whatever we do, these refineries must be brought back through financing; otherwise we are wasting our time,” he said.
Kachikwu further disclosed that he would make a case to President Muhammadu Buhari on the exception of the Petroleum Equalisation Fund (PEF) from the Treasury Single Account (TSA) in order to return normalcy to the payment of bridging claims to transporters of petroleum products.
Reacting to the non-payment of transporters for about three months now, a situation which is further worsening the fuel distribution chain, the minister said the capturing of PEF in the TSA, which shouldn’t be, distorted the payment system of transporters.
He explained, “The reality is that once TSA happened, PEF fund was also captured in TSA, they rightly shouldn’t be. Those are not monies belonging to the federal government and am going to make a case to the President to try and pull that out of there. What it meant is that the automatic device with which PEF need to make payment to transporters ended, so they’ve had a backlog.
Kachikwu said that he has met with the Governor of the Central Bank of Nigeria (CBN) over the matter and he has graciously agreed to approve money to be given to PEF for the payment of petroleum products transporters
The minister, however, added: “Ultimately, the solution would be to move out PEF funds back to the dedicated manner. PEF doesn’t get any subvention from government; they are no different from joint venture holders which the President has graciously approved for exemption. So we need to get that exemption so they can go back to computerised payment system they had. That’s what kept the trucking movement fluid,” he added.
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