- pends N1trn in 1 year
- Adopts price modulation
Determined to minimise the tension occasioned by fuel supply and distribution in the country, the Federal Government is considering a ‘gradual but scientific’ process of removing the subsidy on the product in order to assuage further trauma on the citizenry.
Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who gave this hint in a town hall meeting and media parley in Abuja, yesterday, explained that government is considering oil subsidy removal in trenches, given its huge cost on the economy, explaining that Nigeria spent over one trillion naira to sustain oil subsidy in the last one year.
He said that in order to void the subsidy, following the huge amount that is going into it, federal government is considering a more scientific price modulation approach which entails an elastic price mechanism regime to be reviewed periodically to reflect the prevailing international price of crude.
He dispelled insinuations in some quarters that the Federal Government has concluded plans to increase the pump price of fuel from N87 to N97 per litre as from January 2016 , explaining however that when operational, the novel price modulation system will place a N97 per litre cap on the price of fuel to ensure that Nigerians are insulated from the vagaries of the global crude price.
According to him, “I did not say that refined petroleum products will sell for N97 per litre next year. I said that between a band of N87 and N97, we are going to be looking at prices and today the prices are largely close to N87. So, there is no need to change the price.’’
The Minister noted that going forward, the Petroleum Products Pricing Regulatory Authority, PPPRA, will undertake quarterly review of the crude market situation to determine the price of petroleum products in future.
The new wave of openness and transparency pervading the NNPC also announced 21 off-takers as winners of the open bid exercise conducted in October. The exercise witnessed the unprecedented public harvesting of 278 bids submitted by indigenous and foreign firms seeking to secure contract for the sale and purchase of the 26 Nigerian crude oil grades on offer.
A breakdown of the 2015/2016 crude oil term contract off-takers for the 991, 661 bpd Nigerian equity crude indicate that 240, 000 bpd, representing 24 percent of the total volume on offer is awarded to four refiners classified as major current receivers of Nigerian crude with capacity to process all of Nigerian crude grades. The off-takers in this category include: Emirates National Oil Coy, ENOC, Indian Oil Corporation, CEPSA Refinery Madrid and Sara SPA Refinery. Each of the off-takers in this category was awarded 60, 000 bpd.
Three notable International Trading Companies, namely Trafigura PT Ltd, Mercuria Energy Trading SA and Vitol SA, won the bid for the lifting of 32, 000 bpd of crude based on their pedigree as large scale buyers of Nigerian crude with structure for short term freight intervention and storage.
The off-takers in this category represent about 10 percent of total crude volume on offer. Trading affiliates of international oil companies consisting of ENI Trading and Shipping SPA, TOTSA Total Oil Trading SA, Exxon Sale and Supply LLC and Shell Western Supply and Trading received term allocation of 32, 000 bpd each totalling 128, 000 bpd representing about 13 percent of total volume of crude oil on offer.
While revealing detail plans of the corporation to drive the profitability of the company, Kachikwu said that NNPC would be unbundle into four different companies. He said that federal government plans to increase the country’s crude production to 2.4 barrels a day in the near future.
Kachikwu also revealed that government intends to sell off the four refineries after the conclusion of turn-around maintenance to return them to functionality. He said that as at now, the refineries are not functioning.
Meanwhile, there has been persistent frustration within the nation’s capital, following non-stop scarcity of Premium Motor Spirit, PMS popularly known as fuel with both Public and private sector workers facing hard times going to their work places and returning home thereafter.
Nigerian Pilot observed that most residents in the Federal Capital Territory, FCT who reside mainly at the suburbs had to spend nothing less than two hours standing on the road side before and after work in an effort to board commercial buses.
Our Correspondent who went round the city centre discovered that most filling stations remained locked barely two weeks after the federal government through the Minister of Information and Culture, Alhaji Lai Mohammed assured that issues surrounding the lingering fuel scarcity would be over in few days.
Also, it has been three weeks after Department of Petroleum Resources informed Nigerians of their effort to ensure that no filling station keeps petrol products without selling.
But from the entire Wuse to Garki through Maitama and Asokoro districts of Abuja, the worsening situation was not different as numerous vehicle owners had to queue virtually all day without buying any litre of fuel.
Only NNPC Mega station around Central Area, Total and AP filling stations in Area 11 and Maitama, respectively, were seen dispensing as at the time of filling this report, with no end in sight to the fuel drought.
Each of the few stations selling recorded long vehicular queues even as many left in frustration without buying after spending almost all day.
One of the Civil Servants who simply gave her names as Hadiza wailed “what kind of frustration is this within the capital of the country. For more than week now, I have been staying on the road for hours before I will be able to enter vehicle to work.
“It is the same thing that I pass through after working.”
A cab driver who was equally furious concerning the incidence muttered “where do you want me to go from here. I’m tired of buying from black market which is even more than half of the original price. And to make matter worse, the passengers are not willing to pay when you tell them the price. I end up losing after buying from black market and using it.
“I have decided to remain on this queue even till tomorrow to buy.”
Fuel price in the hands of road side sellers goes as much as N250 per litre.