New Price Regime Will Drive Down Pump Price - Kachikwu

New Price Regime Will Drive Down Pump Price - Kachikwu

After the Minister of State announced on Wednesday that fuel will be sold at N145 per litre a meeting presided over by Vice President Yemi Osinbajo with the Leadership of the Senate, House of Representatives, Governors Forum, and the Labour Unions (NLC, TUC, NUPENG AND PENGASSAN) said:

The new policy will lead improved supply and competition and eventually drive down pump prices, as we have experienced with diesel.

In addition, this will also lead to increased product availability and encourage investments in refineries and other parts of the downstream sector. It will also prevent diversion of petroleum products and set a stable environment for the downstream sector in Nigeria. 

The meeting reviewed:

1. The on-going fuel scarcity that has been on since last year.

2. The high price of fuel as sold by many filling stations.

3. The main reason for the current fuel crisis - inability of importers of petroleum products to source foreign exchange at the official rate. As a result, private marketers have been unable to meet their approximate 50% portion of total national supply of PMS. As a result, private marketers have been unable to meet their approximate 50% portion of total national supply of PMS.

Kachikwu then made the following declarations as decided by the government:

1. 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.

2. 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, 11th May, 2016 and that the new price for PMS will not be above N145 per litre.

We expect that this new policy will lead to improved supply and competition and eventually drive down pump prices, as we have experienced with diesel.

In addition, this will also lead to increased product availability and encourage investments in refineries and other parts of the downstream sector. It will also prevent diversion of petroleum products and set a stable environment for the downstream sector in Nigeria.

We share the pains of Nigerians but, as we have constantly said, the inherited difficulties of the past and the challenges of the 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.

Source: Vanguard