Removal of Fuel Subsidy Stands–PPPRA

The Federal Government has said that the removal of subsidy regime still stands, saying it has not reversed its decision to remove subsidy on Premium Motor Spirit (PMS) popularly called petrol.
It said as far as there is no appropriation for subsidy in the 2016 budget means it has not gone back to the old regime.
The government, through the Minister of State for Petroleum Resources, Dr. Emmanuel Ibe-Kachikwu, had announced the suspension of subsidy in January, a development that made fuel importation unattractive to marketers.Thus making the NNPC as the sole importer of fuel.
However, the Federal Government moved at the weekend to tame the current fuel risis that has crippled Economic activities in most states of country.
It announced an approval by President Muhammadu Buhari for the allocation additional volume of crude oil to the NNPC to guarantee fuel supply.
Independent marketers were allocated about 58 percent importation to compliment the effort of NNPC.
In the new template released by the PPPRA on April 2, the Expected Open Market Price (EOMP) of petrol for other stations was N92.34 per litre, the gap of N5.84 per litre between this cost and the N86.50 per litre is known as the subsidy.
Since the EOMP for stations in this category was N91.80 per litre as against an official pump price of N86 per litre, the subsidy is N5.80 for NNPC affiliate stations,
Essentially, the EOMP is the actual cost of petrol without subsidy. It comprises of the landing cost of the product and its sub-total margins like transporters charge, administration fee, dealers cost and bridging fund among others.
Again, the cost modulation for the management of the petroleum products pricing review made overshot the subsiding margin last week as the Federal Government reviewed the prices for the second quarter.
The implication is that government would now subsidize the petrol by N5.84 per litre, although the Petroleum Products Pricing Regulatory Agency (PPPRA) retained the N86/litre for NNPC Mega Stations and affiliate stations and N86.50 per litre for other marketers.
Meanwhile, the Petroleum Pricing Regulatory Regulatory Agency (PPPRA) in a statement Tuesday said stated that contrary to media reports, what still exists is Price Modulation Policy, through which it considers and reviews pump price of PMS quarterly.
“The Agency also wishes to assure Nigerians that the funds from Over-Recovery in the first quarter (Q1) shall be duly utilized for whatever noticeable imbalance in April 2016 in line with the Price Modulation Principle”, the statement signed by Sotonye E. Iyoyo Acting Executive Secretary of the PPPRA said.
While appreciating the patience of Nigerians, the PPPRA reiterated its commitment to ensuring seamless supply and distribution of petroleum products in the Country.

Author: News Editor

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