FG removes subsidy, petrol to sell for N145 per litre
Thu May 12, 2016 11:05:am National
1.8K By sosa hills
Nigeria's organised labour has rejected the Federal Government's increase of the price of petrol from N86 per litre to N145 per litre.
Through the leadership of the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC), the nation's workers described the increase in the pump price of petrol as insensitive and unacceptable.
While the NLC described the price hike as "the height of insensitivity and impunity, which shall be resisted by the Congress and its civil society allies," the TUC said the government's action caught it unawares.
With the new price hike, the Federal Government yesterday dumped its quarterly price modulation for Premium Motor Spirit (PMS) which it started on New Year's Day for a new regime that would allow marketers sell petrol for N145 per litre.
The move which effectively ended the controversial fuel subsidy policy of the Federal Government, has now left petrol consumers at the mercy of marketers.
The price modulation policy was expected to see petrol prices move along with the price of crude oil in the international market.
At the last review on April 1, the Federal Government retained the pricing for the first quarter until June 30, despite expectations of a downward review due to the low price of crude.
With inflation currently at 12.77 percent, the highest in the past five years, the new price is expected to push up prices for basic commodities.
Announcing the new change in policy in Abuja, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu said a new
maximum pump price of N145 for petrol is to be maintained.
Kachikwu told State House Correspondents shortly after he met with the Vice President Yemi Osinbajo at the Presidential Villa that oil importers are now permitted to start importing the product and can sell at lower prices if they want.
He disclosed that the Department of Petroleum Resources (DPR) and the Petroleum Products Pricing and Regulatory Agency (PPPRA) have been mandated to ensure strict regulatory compliance, including dealing decisively with anyone involved in hoarding petroleum products.
But in a swift reaction, the NLC said the unilateral increase in prices of petroleum products on Wednesday by the Federal Government represented the "height of insensitivity and impunity and shall be resisted by the NLC and its civil society allies."
In a statement signed by the General Secretary to NLC, Dr. Peter Ozo-Eso, the union said: "With the imposition on the citizenry of criminal and unjustifiable electricity tariff and resultant darkness and other economic challenges brought on by the devaluation of the Naira and spiralling inflation, the least one had expected at this time was another policy measure that would further make life more miserable for ordinary Nigerians.
"The latest increase is the most audacious and cruel in the history of product price increase as it represents not only about 80 percent increase, but is tied to the black market exchange rate," Ozo-Eso said.
He continued: "The process through which government arrived at this is both illogical and illegal as the board of the PPPRA is not duly constituted.
In our previous statements and communiqués, we had stressed the need for reconstituting the boards of the Nigerian National Petroleum Corporation (NNPC) and PPPRA and wean both away from the overbearing influence of the Minister of State for Petroleum Resources who has assumed the role of a sole administrator.
"The allusion to the fact that this increase was arrived at after due consultation with stakeholders is not only ridiculous and fallacious, it goes to show that the brief meeting held today (yesterday) during which government was advised to shelve the idea until at least it meets with the appropriate organs of the Congress was in bad faith.
"Accordingly, we urge the government to revert the prices to what they were. We would want to put everybody on notice that we shall resist this criminal increase with every means legitimate.
"Already, an emergency National Executive Council (NEC) meeting has been scheduled for Friday, May 13, 2016 to decide on the next line of action. Meanwhile, our affiliates, state councils and civil society allies are requested to commence mobilisation immediately," he said.
At the meeting with Osinbajo (at his official residence) where the new price was decided, were the leadership of the Senate, House of Representatives, the Nigerian Governors Forum and oil sector labour unions.
Kachikwu said the meeting reviewed the persistent petrol scarcity in the country and blamed the situation on the inability of importers to source foreign exchange at the official rate due to government's declining foreign exchange earnings.
The minister read out the following press statement to journalists and did not take any questions.
"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: (1) The current fuel scarcity and supply difficulties in the country.
(2) The exorbitant prices being paid by Nigerians for the product. These prices range on the average from N150 to N250 per litre currently.
"(3) 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 percent portion of total national supply of PMS.
"Following a detailed presentation by the Honourable Minister of State for Petroleum Resources, it has now become obvious that the only option and course of action open to the government is to take the following decisions:
"(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, the 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 that in the long term, 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," he said.
Statutorily enshrined in the PPPRA Act No 8, 2003, is the responsibility to moderate pricing for the Industry. In performing this role, the PPPRA commenced a petroleum products price modulation framework on January 1, 2016, with the aim of ensuring a ‘fit-for-all' approach that seeks to serve the interest of the Nigerian Consumers, Marketers and the Economy.
A breakdown by the PPPRA showed that the total cost per litre is now N138.11.
This is made up of cost and freight N109.01, Lightering Expense N4.56, NPA N0.84, NIMASA N0.22, Financing N2.51, Jetty ThruPut Charge N0.60, Storage Charge N2.00.
The distribution margin is now made up of Retailers N6.00, Transportation Allowance N3.36, Dealers N2.36, Bridging Fund N6.20, Marine Transport Average N0.15 and Administration Charge N0.30.
The Executive Secretary of PPPRA, Sotonye Iyoyo, in a statement advised NNPC retail stations to sell at price lower than N145/litre.
Meanwhile, the Chairman and Chief Executive Officer of Britannia, Mrs. Uju Ifejika, has commended Kachikwu for the removal of fuel subsidy, saying that it is long overdue.
Through the leadership of the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC), the nation's workers described the increase in the pump price of petrol as insensitive and unacceptable.
While the NLC described the price hike as "the height of insensitivity and impunity, which shall be resisted by the Congress and its civil society allies," the TUC said the government's action caught it unawares.
With the new price hike, the Federal Government yesterday dumped its quarterly price modulation for Premium Motor Spirit (PMS) which it started on New Year's Day for a new regime that would allow marketers sell petrol for N145 per litre.
The move which effectively ended the controversial fuel subsidy policy of the Federal Government, has now left petrol consumers at the mercy of marketers.
The price modulation policy was expected to see petrol prices move along with the price of crude oil in the international market.
At the last review on April 1, the Federal Government retained the pricing for the first quarter until June 30, despite expectations of a downward review due to the low price of crude.
With inflation currently at 12.77 percent, the highest in the past five years, the new price is expected to push up prices for basic commodities.
Announcing the new change in policy in Abuja, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu said a new
maximum pump price of N145 for petrol is to be maintained.
Kachikwu told State House Correspondents shortly after he met with the Vice President Yemi Osinbajo at the Presidential Villa that oil importers are now permitted to start importing the product and can sell at lower prices if they want.
He disclosed that the Department of Petroleum Resources (DPR) and the Petroleum Products Pricing and Regulatory Agency (PPPRA) have been mandated to ensure strict regulatory compliance, including dealing decisively with anyone involved in hoarding petroleum products.
But in a swift reaction, the NLC said the unilateral increase in prices of petroleum products on Wednesday by the Federal Government represented the "height of insensitivity and impunity and shall be resisted by the NLC and its civil society allies."
In a statement signed by the General Secretary to NLC, Dr. Peter Ozo-Eso, the union said: "With the imposition on the citizenry of criminal and unjustifiable electricity tariff and resultant darkness and other economic challenges brought on by the devaluation of the Naira and spiralling inflation, the least one had expected at this time was another policy measure that would further make life more miserable for ordinary Nigerians.
"The latest increase is the most audacious and cruel in the history of product price increase as it represents not only about 80 percent increase, but is tied to the black market exchange rate," Ozo-Eso said.
He continued: "The process through which government arrived at this is both illogical and illegal as the board of the PPPRA is not duly constituted.
In our previous statements and communiqués, we had stressed the need for reconstituting the boards of the Nigerian National Petroleum Corporation (NNPC) and PPPRA and wean both away from the overbearing influence of the Minister of State for Petroleum Resources who has assumed the role of a sole administrator.
"The allusion to the fact that this increase was arrived at after due consultation with stakeholders is not only ridiculous and fallacious, it goes to show that the brief meeting held today (yesterday) during which government was advised to shelve the idea until at least it meets with the appropriate organs of the Congress was in bad faith.
"Accordingly, we urge the government to revert the prices to what they were. We would want to put everybody on notice that we shall resist this criminal increase with every means legitimate.
"Already, an emergency National Executive Council (NEC) meeting has been scheduled for Friday, May 13, 2016 to decide on the next line of action. Meanwhile, our affiliates, state councils and civil society allies are requested to commence mobilisation immediately," he said.
At the meeting with Osinbajo (at his official residence) where the new price was decided, were the leadership of the Senate, House of Representatives, the Nigerian Governors Forum and oil sector labour unions.
Kachikwu said the meeting reviewed the persistent petrol scarcity in the country and blamed the situation on the inability of importers to source foreign exchange at the official rate due to government's declining foreign exchange earnings.
The minister read out the following press statement to journalists and did not take any questions.
"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: (1) The current fuel scarcity and supply difficulties in the country.
(2) The exorbitant prices being paid by Nigerians for the product. These prices range on the average from N150 to N250 per litre currently.
"(3) 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 percent portion of total national supply of PMS.
"Following a detailed presentation by the Honourable Minister of State for Petroleum Resources, it has now become obvious that the only option and course of action open to the government is to take the following decisions:
"(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, the 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 that in the long term, 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," he said.
Statutorily enshrined in the PPPRA Act No 8, 2003, is the responsibility to moderate pricing for the Industry. In performing this role, the PPPRA commenced a petroleum products price modulation framework on January 1, 2016, with the aim of ensuring a ‘fit-for-all' approach that seeks to serve the interest of the Nigerian Consumers, Marketers and the Economy.
A breakdown by the PPPRA showed that the total cost per litre is now N138.11.
This is made up of cost and freight N109.01, Lightering Expense N4.56, NPA N0.84, NIMASA N0.22, Financing N2.51, Jetty ThruPut Charge N0.60, Storage Charge N2.00.
The distribution margin is now made up of Retailers N6.00, Transportation Allowance N3.36, Dealers N2.36, Bridging Fund N6.20, Marine Transport Average N0.15 and Administration Charge N0.30.
The Executive Secretary of PPPRA, Sotonye Iyoyo, in a statement advised NNPC retail stations to sell at price lower than N145/litre.
Meanwhile, the Chairman and Chief Executive Officer of Britannia, Mrs. Uju Ifejika, has commended Kachikwu for the removal of fuel subsidy, saying that it is long overdue.
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