The Federal Government has finally dumped the subsidy on Premium Motor Spirit (PMS) also known as petrol, after weeks of speculations, as the product will now sell for N145 from Wednesday.
Already filling stations in Lagos that had the product in stock have stopped selling to motorists in anticipation of the official increase in price.
The decision was reached to allow market forces determine the price of the product at a meeting held at the headquarters of the Nigerian National Petroleum Corporation (NNPC) in Abuja.
Speculations are that the price of the product may start from N145 per litre for now.
Read below the statement by Ibe Kachikwu, Minister of State for Petroleum Resources after the meeting:
PRESS STATEMENT ON CURRENT FUEL SITUATION IN NIGERIA
We have just finished a meeting of various stakeholders presided over by His Excellency, the Vice President of the Federal Republic of Nigeria.
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.
- The exorbitant prices being paid by Nigerians for the product. These prices range 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 Honorable Minister of State for Petroleum Resources, it has now become obvious that the only option and course of action now open to the government is to take the following decisions:
- 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, 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.
HONOURABLE MINISTER OF STATE FOR PETROLEUM RESOURCES